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The World has Passed Peak Oil, says Top Economist

Despite high prices, crude oil production has stayed basically flat for roughly five years. It seems this is the all-time high-water mark, according to Fatih Birol, chief economist for the International Energy Agency. “We think that crude oil production for the world has already peaked in 2006,” he told the Australian Broadcasting Corporation. “I think it would have been better if the governments have started to work on it at least 10 years ago.”

At a European Parliament conference on peak oil, the European Commission’s director-general for transport and mobility policy warned if actions are delayed to reduce oil dependency, “we may be forced to drastically reduce all our mobility.”

Already, rising energy costs are taking their toll around the world, with U.S. economic growth stumbling and raising the spectre of stagflation, as well as, helping to drive up food prices in Latin America, and driving inflation in Europe.

Squeezing Renewables Through Bottlenecks

Renewable energy could, in theory, take over quickly from fossil fuels, according to a draft of a new report on renewable energy by the Intergovernmental Panel on Climate Change. The study says renewables could grow 20-fold in the next four decades—more than enough to meet projected demand. But in reality, the report argues, less than 2.5 percent of that potential will be put into place.

One of the bottlenecks in renewable energy production is the electric grid, argued another recent report, this one by the World Resources Institute. Idaho’s power grid, for example, could soon be overloaded by electricity from wind turbines, so the state’s Public Utilities Commission has suspended permits for all but fairly small turbines, cutting the largest allowable turbine 100-fold, from 10 megawatts down to 100 kilowatts.

Wind energy isn’t going away anytime soon, either, according to a study that estimated the effect of continued global warming on wind patterns over America’s lower 48 states and a portion of northern Mexico. By mid-century, most areas will see barely any change in their windiness, and those that will see a drop weren’t great sites for wind power in the first place, the researchers say.

Feed-ins Choked Off

The sluggish economic recovery is also hurting renewables, with the UK’s feed-in tariff—the subsidy for electricity that renewable energy systems produce and sell back to the grid—falling under the blade of budget cuts. The tariff has led to a surge in home solar installations. Now for larger projects, the government is planning to cut the tariff drastically—although projects installed before the August deadline will be grandfathered in.

To get in under the wire and secure the feed-in tariff, a community group rushed to secure funding to put up a bank of more than 500 solar panels on a brewery’s roof, which will keep the beer cool—and the excess electricity will be sold back to the grid. Although community power companies have been created before, such as a pioneering one in Germany, the effort claims to be the first in the UK. Despite their estimate that it will take investors 20 years to make a return, they have attracted widespread interest.

On the other end of the funding spectrum, money for the $24 billion International Thermonuclear Experimental Reactor in France was under question in the European Parliament. The project aims to develop a new source of energy through fusion of hydrogen atoms—the same process that powers the sun—but it has run far over the original budget.

Also on the chopping block are about $6 billion in annual U.S. subsidies for corn ethanol production. After proposals to cut these subsidies flat-out, a bipartisan group of farm-state senators made a counter-proposal of a gradual phase-out.

The U.S. Energy Information Administration, a key source of data on the country’s energy production and supplies, is also being forced to cut back, canceling many of its data collection efforts, including its annual compilation of national oil and gas reserves. The cuts could also hurt energy efficiency efforts, since the Administration is suspending updates to its widely used National Energy Modeling System, and canceling its Commercial Buildings Energy Consumption Survey.

Feds Push Emissions Cuts, Clean Energy

In other areas, the federal government is expanding efforts on clean energy and efficiency, with the firstscorecards on energy and environmental performance, following the adage “you can’t manage what you don’t measure.” President Obama earlier set goals for 2020 of cutting federal greenhouse gas emissions from buildings and fuels by 28 percent, and indirect emissions (such as from flights) by 13 percent. The new scorecards suggest some progress toward that goal; compared with its 2008 baseline, they found a 2.5 million metric ton reduction in carbon dioxide.

Energy efficiency in buildings could also get a boost with the U.S. Environmental Protection Agency’s “Battle of the Buildings,” a competition to cut energy use drastically and cost-effectively. This year, 245 buildings are vying for the title, compared with just 14 last year.

U.S. government action on clean energy may expand nonetheless, with a new Senate bill proposing to create a new Clean Energy Deployment Administration to help finance renewable energy projects. Sen. Jeff Bingaman said in a statement on the bill, “We need to find a way to pay for [it].”

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

Comments

  1. Paul Wright
    England
    November 25, 2013, 3:26 pm

    Until about 150 years ago, we didn’t need oil, electricity, plastics, petroleum, and all that comes from it. If the oil runs out, and there’s nothing to replace it, then millions and millions die due to agriculture’s dependence on oil. The planet and it’s human cargo return to an agrarian, symbiotic and sustainable coexistence. There’s no-one to blame but ourselves. The planet abides.

  2. Movie Nights – GASLAND | TransitionKW
    September 13, 2013, 6:15 pm

    [...] (25%), industrial uses (30%) and commercial uses (15%). But we need oil, not natural gas, as the world passed peak oil in 2006. Natural gas could potentially substitute oil in some specific applications (it could be used [...]

  3. The UK energy crunch vulnerability exposed
    February 11, 2013, 3:09 pm

    [...] range from 25% to 75% of the whole country’s output which if continues will leave the UK exposed to an oil crisis and possible [...]

  4. [...] economist of the International Energy Agency, said last year that it appears the world reached the peak of crude oil production in 2006—and since, crude oil production has been roughly [...]

  5. [...] before 2035, whereas Fatih Birol, chief economist for the International Energy Agency, has been quoted saying crude oil production probably happened in [...]

  6. [...] Chris Nelder of SmartPlanet—in particular, Birol’s warning that the world has reached the peak of conventional crude oil production, and that high oil prices are hampering economic [...]

  7. [...] Chris Nelder of SmartPlanet—in particular, Birol’s warning that the world has reached the peak of conventional crude oil production, and that high oil prices are hampering economic [...]

  8. [...] Chris Nelder of SmartPlanet—in particular, Birol’s warning that the world has reached the peak of conventional crude oil production, and that high oil prices are hampering economic [...]

  9. Greg
    Australia
    September 7, 2011, 12:40 am

    At the moment you are not yet seeing the real effects of peak oil simply because the global financial system is about to implode. i.e. Growth (the ultimate cause of all mans woes) is contracting. As it contracts demand for oil drops. Call it a false price plateau. They operate in tandem one masking the true nature of the other. The problem of course is as growth contracts more and more people lose their jobs. Governments run out of money for the dole and chaos ensues. It’s happening already. Ultimately the break even point will be reached and the the oil price will sky rocket. Unfortunately countries like the US and China will resort to war before they drift off quitely into the history books.

  10. Greg
    August 9, 2011, 7:33 pm

    I went through various stages when I first learned of peak oil ranging from panic to depression. Governments are clearly doing nothing blah blah. Governments simply do not ahve the guts to turn their backs on “Growth”. Then it struck me. Capitalism depends on growth. Growth ultimately implies the complete destruction of our planet. Growth does not imply wealth but rather the ability to sustain (at any level) an ever increasing population. In a nutshell capitalism is not dead, it is death. I’m now happy and content. I don’t talk about peak oil anymore. I want it to happen. 5/6ths of the world population will be wiped out. The planet will be saved. I will most likely die but so what. I’m going to die anyway. I’ll die happy! Bring it on. Consume people. Keep buying your crappy toys and fuel guzzling cars all in the name of profit. LOL I’m a CPA. I’m currently re-skilling to become a carpenter and learning how to use tools that don’t require electricty.

  11. rpfeynman
    madagascar
    May 18, 2011, 6:24 am

    pseawrightb, it is irrelevant wether you see little value in Harquebus comment. He is right! you are not.

  12. pseawrightb
    Georgia, USA
    May 17, 2011, 4:11 pm

    Harquebus,

    I see little value in your pointing out what we would have, could have, should have done.

    Also, in English, commas come before, not after, coordinating conjunctions. I doubt that your science and gifts of prophecy are any better than your punctuation.

  13. Harquebus
    Adelaide
    May 15, 2011, 11:51 pm

    Bob.
    It’s too late. There are too many of us. The first plague of humans in the history of the planet. What happens to plagues?
    What we should have done is depopulated, consumed less and planted lots and lots of trees. These are the only three things we can do. Everything else is rubbish. I don’t see them happening, do you?
    Peak oil will solve the population and pollution problems but, it won’t be pretty and will be bloody.

  14. Jim
    NJ
    May 15, 2011, 1:06 am

    Do you think there will be a tipping point for the renewable energy industry or will development be gradual? And to the all these naysayers, can you find a better powerhouse in your neighborhood than the sun?

  15. Bob
    U.S.
    May 12, 2011, 5:32 pm

    Harquebus – Since you are convinced there’s no other way, why don’t you volunteer to be the first of your ‘depopulate’ fix? Or try to contribute something positive to the ‘fix’ in some other way??

  16. Harquebus
    Adelaide
    May 12, 2011, 7:32 am

    When a “renewable generator” can replicate itself using only the energy it generates then, the proponents of these “renewable” technologies can brag. Good luck fellas.

  17. Monk
    May 10, 2011, 12:44 pm

    Peak oil is not a “theory” because it has taken place many times in the past, notably in the U.S., where oil production dropped more than 30 years ago. The reason is painfully obvious: oil is a limited resource.

  18. Aaron
    Alberta
    May 8, 2011, 2:29 am

    Let us all now fiecely invest and build this 100% cradle to cradle, solar powered, fully diverse planet with full employment for all.

    “Our goal is a delightfully diverse, safe, healthy and just world
    with clean air, water, soil and power, economically, equitably, ecologically and elegantly enjoyed”.

    This is a fantastic and very hopeful video explaining the transition many countries and many companies are now untaking to become Cradle to Cradle Certified.

    http://www.youtube.com/watch?v=IoRjz8iTVoo

    This is the video that launched the Cradle to Cradle Products Institute in California in 2010 and now with many more coming around the world.

    http://c2ccertified.org/media.php/

  19. Max
    Richmond, Va. USA
    May 7, 2011, 11:28 am

    There is nothing perpetual about “alternative energy” collection systems. The sun that drives all that is not perpetual, but it will outlast every other source we have. The trees are solar but we can’t use a tree directly, we have to harvest and process them. PV electricity is immediately useful to our electronics and can be stored in batteries. Plants also only convert about 1% to 4% of the solar energy into something we can burn. And that’s before processing costs to efficiency. Solar panels are in excess of 12% efficient. Also no moving parts. Our oil consumption is subsidized but not so obviously.

  20. Harquebus
    May 7, 2011, 12:00 am

    Not so Mason. Hydro scrapes the energy from millions of kilometers of ocean. You are not going to funnel that much energy through a wind farm and sunlight is diffuse.

    We can build massive scale solar collectors very easily. Plant lots and lots of trees. Everything else is a con so, I suggest you do your homework and then come back and tell me why “renewables” need to be mandated or subsidized. If they could do it, the planet would be covered in them but, they cant. That would be perpetual energy.

  21. Ian Cooper
    May 6, 2011, 10:09 pm

    “…according to Fatih Birol, chief economist for the International Energy Agency… “I think it would have been better if the governments have started to work on it at least 10 years ago.””

    The above statement strikes me as the equivalent of a spokesman for the National Weather Center saying that a hurricane that cost millions of dollars and took thousands of lives “should have warranted evacuation”, even though the weather center failed to issue any warnings as the hurricane approached.

    I mean, wasn’t it HIS JOB to tell the governments of the world that peak oil needed to be addressed over ten years ago? I mean, according to the IEA, the threat of peak oil didn’t even exist until late last year. How can government do anything about a situation that the IEA claims is a fantasy?

  22. Mason Inman
    May 6, 2011, 5:30 pm

    To Harquebus:

    In thermodynamics, you can get energy from one place and transform it into another form, or concentrate it in another place. This is what plants do when they grow: they take energy in the sun’s rays and turn it into energy stored in their leaves, seeds, and so on. Animals evolved to eat plants because they are a good source of energy.

    Renewable energy works the same way: Wind and solar energy, for example, ultimately originates with the sun. It’s a bit counterintuitive to say that wind energy is really solar energy, but the sun’s heat drives the movement of air in the atmosphere, and so generates wind power.

    Renewable energy is not an attempt to create energy out of nothing, but rather to harness energy that’s in the environment already and put it to human use. There’s nothing there that violates the laws of thermodynamics.

  23. Torbjörn Larsson, OM
    May 6, 2011, 9:39 am

    Oops. “the current curve” is the production curve, natch.

  24. Torbjörn Larsson, OM
    May 6, 2011, 9:29 am

    The problem with using “peak oil” is that it is a fuzzy term by design. The theory of peak oil was for oil fields and has AFAIU never reproduced the sharp peaks and fat tails of those. In that sense it can be rejected.

    And it shouldn’t be applicable to a market. In markets with many fields, producers and developing technology I understand that market peaks are characterized by their flattened shape. The same interview where Biral says the production has peaked, which is another thing than “peak oil”, mentions just below that there are plenty of reserves to develop, his concern is that they aren’t developed timely.* The interview is cherry picked.

    * Indeed, I found a Wikipedia graph that shows the current curve has regained from a dip around ~ 2000. The over all curve is climbing. So presumably the industry cycle is trying to catch up with earlier low market demands; we are confusing “weather” with “climate” here.

    Maybe these confusions, which reminds of the AGW denialists anti-science, explains why people are enjoying such a cockamamie theory like “peak oil” instead of the usual market economics of other stuff.

  25. Harquebus
    Adelaide
    May 6, 2011, 8:24 am

    In reply to Mason Inman. I have already read that and it is a load of rubbish. A sales pitch only.
    You can not get more energy out of a system than you put into it. Thermodynamics mate, thermodynamics. Entropy is a one way street.

  26. Mason Inman
    May 6, 2011, 1:03 am

    In reply to Harquebus:

    Actually, there are many studies that show that wind and solar energy *do* give a return on the energy that goes into their manufacture and maintenance. Here’s a summary of that literature for wind, written by one of the top experts in the field:
    http://www.eoearth.org/article/Energy_return_on_investment_(EROI)_for_wind_energy

    These studies find an energy return on investment of around 20- to 25-fold for wind turbines. If you built a turbine and put it somewhere there is very little wind, then you won’t get a return on your energy, but if it is well-sited, then you can get a big return.

    Solar panels give an energy return of around 7-fold, accoring to another article from the same source, The Encyclopedia of the Earth, on photovoltaic (solar) power:
    http://www.eoearth.org/article/Energy_return_on_investment_(EROI)_for_photovoltaic_energy

    For biofuels, it is more of a mixed bag. Corn ethanol produced in the U.S. has an energy return ratio of about 1—which means it does not produce much, if any energy. It might actually be a loss, if some studies are correct that say it has a ratio below one. But the main point is that any return is small compared with wind or solar.

    Sugar cane ethanol made in Brazil, however, has a much bigger return on the energy invested—about 8-fold, according to a National Geographic article. Check out their infographic comparing different types of biofuels:
    http://ngm.nationalgeographic.com/2007/10/biofuels/biofuels-interactive

    There are some cases where renewables may not give a return on the energy invested, but in general, these studies cited in the links show that there are many cases in which you do get a positive return on energy.

    Often the energy return is not as big as for fossil fuels—but those have their own issues, since the supplies are finite, and burning them the way we do now is causing climate change.

    In summary, here’s a graph made by Charles Hall and colleagues of the State University of New York, comparing all these different sources, including also hydroelectricity and firewood:
    http://www.theoildrum.com/files/ch_balloon_tod.png

  27. Harquebus
    Adelaide
    May 5, 2011, 9:50 pm

    There is no such thing as renewable energy. Wind and solar generators to not return the energy that goes into their manufacture and maintenance. They are a con. We should not be wasting our precious fossil fuels building these inefficient devices. These devices will not last the millions of years that it took to produce fossil fuels.

    What we should have done is depopulated, consumed less and planted lots and lots of trees.

  28. Nathan Clark
    Ashland, Kentucky
    May 5, 2011, 4:38 pm

    It is apparent at this point that we are experiencing some of the effects of peak oil. However, my theory is we will go through several periods of small peaks before the downslope. This is due to demand destruction through price hikes. Economic slow downs will also slow the down slope.