Peak Oil & Peak Everything Lecture at Cornell

Peak Oil and Peak Everything

Will
Mar(n
wjm228@cornell.edu

April
17,
2012

Lecture Outline
• About
Me
• Peak
Oil
Intro
(5
slides)
• Some
Economics
(4
slides)
• Current
State
of
Aﬀairs
(6
slides)
• Subs(tu(on
and
the
Final
Fron(ers

(9
slides)
• Peak
Everything
(10
slides)
• Outcomes
(3
slides)

• (~1
minute
per
slide
-‐
so
let’s
hustle!)
2

Intro Economics Current
State Subs(tu(on Peak
Everything Outcomes

The Scale of the Problem
Current
Global
Oil
Mix Current
Global
Energy
Mix

• 81%:
Transporta(on
fuels
– 46%
for
gasoline
– 9%
for
jet
fuel
– 26%
for
diesel
and
other
liquid

transporta(on
fuels

• 19%:

Industrial
&
Commercial
– Hea(ng
oil,
electricity
genera(on,
plas(cs,

synthe(c
rubber,
asphalt
and
tar,
wax,

lubricants,
adhesives,
solvents,
explosives,

paints,
sealants,
corrosion
inhibitors,
cosme(cs,

fragrances,
pharmaceu(cals,
fer(lizer,

pes(cides,
food
ﬂavorings,
food
addi(ves
and

other
industrial
and
commercial
products.

3

Everything Outcomes

Addicted to Oil
Current
Global
Oil
Mix

• 81%:
Transporta(on
fuels
– 46%
for
gasoline
– 9%
for
jet
fuel
– 26%
for
diesel
and
other
liquid

transporta(on
fuels

• 19%:

Industrial
&
Commercial
– Hea(ng
oil,
electricity
genera(on,
plas(cs,

synthe(c
rubber,
asphalt
and
tar,
wax,

lubricants,
adhesives,
solvents,
explosives,

paints,
sealants,
corrosion
inhibitors,

cosme(cs,
fragrances,
pharmaceu(cals,

fer(lizer,
pes(cides,
food
ﬂavorings,
food

addi(ves
and
other
industrial
and
commercial

products.

4

Everything Outcomes

Peak Oil
• Peak
oil
is
the
point
at
which
we
have
reached

a
maximum
rate
in
global
oil
produc(on.

It
does
not
mean
that
oil
is
“half
gone”
Peak
oil
is
about
rates
not
reserves
Million
Dollar
Analogy
5

Everything Outcomes

Aggregating Oil Field Peaks
Alaska
Peak
Oil

United
States
Peak
Oil
in
1971

Texas
Peak
Oil

6

Everything Outcomes

Eventually The World Will Peak

7

Everything Outcomes

Supply Inelasticity

Since 2005, Global Oil Supply Is Almost Totally Inelastic Since 2005, OPEC Oil Supply Is Almost Totally Inelastic
$150.00 $150.00

$112.50 $112.50

$75.00 $75.00

$37.50 $37.50

$0 $0
75,000 78,750 82,500 86,250 90,000 25,000 28,000 31,000 34,000 37,000
World Oil Supply Jan 2001 - Jan 2005 (Thousand Barrels per Day) OPEC Oil Supply Jan 2001 - Jan 2005 (Thousand Barrels per Day)
World Oil Supply Jan 2005 - Oct 2010 (Thousand Barrels per Day) OPEC Oil Supply Jan 2005 - Oct 2010 (Thousand Barrels per Day)

8

Everything Outcomes

Demand Inelasticity

Oil Demand Is Almost Perfectly Inelastic
Brent Spot Price FOB (Dollars per Barrel) $150.00

$112.50

$75.00

$37.50

$0
0 13,250 26,500 39,750 53,000
OECD Oil Demand Jan 2001 - Oct 2010 (Thousand Barrels per Day)

9

Everything Outcomes

Supply and Demand
150 US$
Inelas(c
Supply
Future
Price
120 US$

Supply Q
90 US$ Demand Q
Current
Price
Demand Q’

60 US$

30 US$ Current
Produc(on Future
Produc(on

75 MMbpd 85 MMbpd 95 MMbpd

10

Everything Outcomes

Substitution

11

Everything Outcomes

Peak Oil Forecasts

2%
deple(on
rate
=
35
year
half
life
6%
deple(on
rate
=
12
year
half
life
(the
same
level
of
oil
produc(on
as
we
had
in
1959!)
12

Everything Outcomes

Many Countries Have Peaked
Countries That Have Reached Peak Oil
Country Peak Year Peak Production Rate % Below
(MMbd) Peak Today
United States 1970 9.659 34%
Iran 1974 6.022 30%
Norway 2001 3.418 37%
Mexico 2004 3.383 23%
United Kingdom 1999 2.649 54%
Indonesia 1977 1.686 41%
Egypt 1993 0.893 22%
Argentina 1998 0.847 27%
Australia 2000 0.700 30%
Syria 1995 0.623 35%
Equatorial Guinea 2011 0.563 23%
Brunei 1979 0.501 34%
Yemen 2001 0.457 42%
Vietnam 2004 0.397 14%
Denmark 2004 0.389 36%
Gabon 1996 0.370 33%
Romania 1976 0.299 72%
Trinidad & Tobago 1978 0.234 37%
Peru 1985 0.190 20%
Tunisia 1984 0.120 33%
Italy 2006 0.119 16%
Uzbekistan 1995 0.103 54%

13

Everything Outcomes

The World’s Megafields Have Peaked
The World’s 20 Largest Oil Fields Have Already Peaked
Field Country Year of Year of Peak 2007 Production as % of
Discovery World Total
Ghawar Saudi Arabia 1948 1980 7.26%
Cantarell Mexico 1977 2003 2.39%
Safaniyah Saudi Arabia 1951 1998 2.01%
Rumaila N & S Iraq 1953 1979 1.78%
Greater Burgan Kuwait 1938 1972 1.67%
Samotlor Russia 1960 1980 1.29%
Ahwaz Iran 1958 1977 1.10%
Zakum Abu Dhabi (UAE) 1964 1998 0.96%
Azeri-Chirag- Azerbaijan 1985 2007 0.94%
Guneshli
Priobskoye Russia 1982 2007 0.93%
Bu Hasa Abu Dhabi (UAE) 1962 1973 0.78%
Marun Iran 1964 1976 0.73%
Raudhatain Kuwait 1955 2007 0.71%
Gachsaran Iran 1928 1974 0.71%
Qatif Saudi Arabia 1945 2006 0.71%
Shaybah Saudi Arabia 1968 2003 0.71%
Saertu (Daqing) China 1960 1993 0.67%
Samotlor (Main) Russia 1961 1980 0.66%
Fedorovo-Surguts Russia 1962 1983 0.65%
Zuluf Saudi Arabia 1965 1981 0.64%
Total: 27.30%

14

Everything Outcomes

Global Oil Discoveries Have Peaked
Global Oil Discoveries Peaked in 1965
90.0

67.5

45.0

22.5

0
1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002

Global Annual Oil Discoveries (billion barrels) 10 Year Moving Average

15

Everything Outcomes

A Zero-Sum Game With a Shrinking Pie

Global Oil Per Person Peaked in 1979
6.0

4.5

3.0

1.5

0
1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006

Global Oil Production Per Person (Bbl/Person/Yr)

16

Everything Outcomes

New Fields Peak Earlier & Decline Faster

Newer Mega-Fields Reach Their Peak Faster Post-Peak Decline Rates Are Much Worse For Newer Fields

70.0 13%

52.5 10%

35.0 7%

17.5 3%

0 0%
1928 1934 1940 1946 1952 1958 1964 1970 1976 1982 Pre-1970 1970’s 1980’s 1990’s 2000’s
Years Between Discovery and Peak Post-Peak Decline Rate by Year of First Production
World Average Post-Peak Decline Rate

17

Everything Outcomes

Fungibility of Substitutes
Electricity
≠
Liquid
Transporta(on
Fuels

18

Everything Outcomes

Limits to Speed of Electrification

• In
the
United
States,

the
average
age
of
0.1%
vehicles
on
the
road
is
Percent of China's 18.5
million new cars each

10
years year that are electric

– Ten
years
ago,
the

average
vehicle
age

was
8.8
years
• At
the
current
5%

scrappage
rate,
it

would
take
20
years
to

turn
over
the
US
ﬂeet

of
cars
19

Everything Outcomes

Grasping at the Final Frontiers of Oil
What’s Left? Limits to Scale-Up of Remaining
Oil Substitutes
• Ultra-‐Deepwater
Oﬀshore
• Arc(c
Oil • Engineering
Problems
– Engineering
Complexity
• Poli(cally
Diﬃcult
Onshore

Oil
-‐
(Iraq,
Central
Africa,
etc.) – Environmental
Shortages

• Heavy
Oil
(Canadian
Tar
• Social
Problems
Sands,
Venezuelan
Heavy
Oil,
– Environmental
Pollu(on
Rocky
Mountain
Oil
Shale) – Poli(cal
Issues
• Biofuels • Limits
From
“Peak

• Gas-‐to-‐Liquids Everything”
– Feedback
Loops
• Coal-‐to-‐Liquids
– Resource
Shortages

20

Everything Outcomes

Engineering Limits to Substitutes
Oﬀshore
– Immense
Complexity
and
Cost
• Arc(c
Oil
– Immense
Complexity
and
Cost
– Ability
to
Control
Blowouts
in
the
Middle
of

Winter
• Heavy
Oil
(Canadian
Tar
Sands,
Venezuelan

Heavy
Oil,
Rocky
Mountain
Oil
Shale)
– Scale
Limited
by
Water
&
Natural
Gas

Availability
– Reﬁning
Capability
and
Cost
• Biofuels
– Scale
Limited
By
Available
Land
&
Water
21

Everything Outcomes

Cost of Substitutes

Source:
A
E
Farrell
&
A
R
Brandt,
University
of
California,
Berkeley 22

Everything Outcomes

Environmental Effects of Substitutes

Oﬀshore
– Risk
of
Oil
Spills
and
Blowouts
• Arc(c
Oil
– Blowouts
in
Winter:
Impossible
to
Contain
• Poli(cally
Shaky
Land
Oil
-‐
(Iraq,
Central

Africa,
etc.)
– Lack
of
Environmental
Laws
• Heavy
Oil
(Canadian
Tar
Sands,
Venezuelan

Heavy
Oil,
Rocky
Mountain
Oil
Shale)
– Massive
Water
Pollu(on
• Athabasca
Tailing
Ponds
Can
Be
Seen
From

Space!
– Much
Higher
Greenhouse
Gas
Emissions
• Biofuels
• Gas-‐to-‐Liquids
• Coal-‐to-‐Liquids

23

Everything Outcomes

Environmental Effects of Substitutes

24

Everything Outcomes

Limits to Scale of Electrical Substitutes

• NIMBY Current
Global
Energy
Mix
– Nuclear
– Wind
– Gas
Fracking
– Coal
Mountaintop

Removal
• Variability
and

Intermipency
– Solar
– Wind
• Loca(on
Availability
– Hydro
– Wind
25

Everything Outcomes

Limits From “Peak Everything”

• Feedback

Loops
• Resource

Shortages Receding
Horizons
• Net
Energy:

Source:
Prof
Charles
Hall,
Syracuse
University 26

Everything Outcomes

Peak Everything

• Peak
Fossil
Fuels
– Peak
Oil,
Peak
Natural
Gas,
Peak
Coal
• Peak
Minerals
– Peak
Uranium,
Peak
Metals
• Peak
Food
– Peak
Fish,
Peak
Soil,
Peak
Water,
Peak
Fer(lizer

(peak
gas,
peak
phosphate
rock,
peak
potash)

27

Everything Outcomes

Peak Gas
Countries That Have Reached Peak Gas
US Gas Peaked in 1974 but Decline Has Been Halted by Fracking
Country Peak Peak % off from
23 Year Production Peak
(Bcf/D)
United Kingdom 2000 10.45684986 47.15%
17 Ukraine 1985 3.75452235 52.19%
Romania 1982 3.57715492 70.43%
Germany 1979 1.96117317 47.57%
12 Italy 1994 1.77870648 58.60%
Denmark 2005 1.0107839 21.77%
Poland 1978 0.64114656 38.04%
6

The
Fracking
Treadmill
0
1930 1939 1948 1957 1966 1975 1984 1993 2002 “regardless
of
their
produc(vity,

[shale
gas
wells]
exhibit
an
early
peak

US Natural Gas Production (Tcf) Fracking
of
produc(on
and
then
a
rapid

decline”
-‐Interna(onal
Energy
Agency

28

Everything Outcomes

Peak Coal

Coal Quality Has Been Declining Since the 1960’s Coal Extraction Productivity Peaked in 2000

26.00 7.00

23.25 5.25

20.50 3.50

17.75 1.75

15.00 0
1949 1955 1961 1967 1973 1979 1985 1991 1997 2003 2009 1949 1955 1961 1967 1973 1979 1985 1991 1997 2003 2009

US Coal Quality (Million Btu per Short Ton) US Mining Productivity (Short Tons Per Employee Hour)

29

Everything Outcomes

Peak Coal
Countries That Have Reached Peak Coal
Appalachian Coal Production Peaked in 1997
Country Peak Year Peak Production % off from Peak
700 (Tonnes)
Germany 1985 521.6 65.05%
Poland 1988 266.51 50.01%
Ukraine 1986 193.1 62.04%
600 Kazakhstan 1988 143.1 22.57%
United Kingdom 1981 127.47 85.75%
Czech Republic 1984 124.93 59.47%
500 Romania 1989 61.34 49.74%
Spain 1983 39.95 81.91%
Bulgaria 1987 36.82 21.61%
Hungary 1982 26.08 65.20%
400
South Korea 1988 24.3 91.42%
Thailand 1997 23.39 23.56%
France 1981 22.73 99.56%
300 Japan 1981 17.69 94.82%
1949 1955 1961 1967 1973 1979 1985 1991 1997 2003 2009 Mexico 2007 12.5145 25.33%
Venezuela 2004 8.107304 50.93%
Brazil 1985 7.71 28.99%
US Coal Production East of the Mississippi (Million Short Tons)
Zimbabwe 1991 5.62 70.33%

30

Everything Outcomes

Peak Coal is Leading to Desperation

Mountaintop
Removal

31

Everything Outcomes

Peak Metals
Gold Production Has Plateaued Since the 1990’s Platinum Group Metals Production Peaked In 2007

3,000 600

2,250 450

1,500 300

750 150

0 0
1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 1945 1952 1959 1966 1973 1980 1987 1994 2001 2008
World production (Metric Tons) World production (Metric Tons)

Rare Earth Metal Production Has Leveled Off Is Copper Production Reaching a Plateau?
140,000 17,000,000

105,000 12,750,000

70,000 8,500,000

35,000 4,250,000

0 0
1990 1993 1996 1999 2002 2005 2008 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
World production (Metric Tons) World production (Metric Tons)

32

Everything Outcomes

Peak Food
All Meat is Net-Energy Negative
We Burn 10 Calories of Production system (locale) Edible-protein
energy return on
Hydrocarbon Fuel For Every investment (EROI)
Calorie of Food We Eat in the US Carp — extensive pond culture (various) 1-1.1:1
Chicken (US) .25:1
Tilapia — extensive pond culture (Indonesia) .13:1
Mussel — longline culture (Scandinavia) .1-.5:1
Turkey (US) .1:1
Carp — unspecified culture system (Israel) .084:1
Global fisheries .08:1
Milk (US) .071:1
Swine (US) .071:1
Tilapia — unspecific culture system (Israel) .066:1
Tilapia — pond culture (Zimbabwe) .060:1
Beef — pasture-based (US) .050:1
Catfish — intensive pond culture (US) .040:1
Eggs (US) .025:1
Beef — feedlot (US) .025:1
Tilapia — intensive cage culture (Zimbabwe) .025:1
It takes 6 barrels of oil to raise one Atlantic salmon — intensive cage culture (Canada) .025:1

steer Shrimp — semi-intensive culture (Ecuador)
Chinook salmon – intensive cage culture (Canada)
.025:1
.020:1
Atlantic salmon – intensive cage culture (Sweden) .020:1
Lamb (US) .018:1
Sea bass – intensive culture (Thailand) .015:1
Shrimp – intensive culture (Thailand) .014:1
33

Everything Outcomes

Peak Food
Global food production and global energy consumption have a correlation of 0.99

Food and Fuel Prices Rise Together

Food is Energy $150.00 300
110.0 12000

$112.50 225
82.5 9000

$75.00 150
55.0 6000

$37.50 75
27.5 3000

$0 0
Jan-90 Jan-97 Jan-04 Jan-11
0 0
1965 1970 1975 1980 1985 1990 1995 2000 2005
Brent Crude Price Oil Price Trendline Food Price Index
Food Price Trendline
Net Global Food Production Index Number (2004-2006 = 100)
Total World Primary Energy Consumption (million tons of oil equivalent)

34

Everything Outcomes

Peak Food - Peak Fish
Chilean Seabass Capture Has Collapsed
Atlantic Cod Capture Has Collapsed
50,000
3,000,000

2,250,000 37,500

1,500,000 25,000

750,000 12,500

0 0
1950 1959 1968 1977 1986 1995 2004 1975 1980 1985 1990 1995 2000 2005 2010
Atlantic Cod Capture (t) Chilean Seabass (Patagonian Toothﬁsh) Capture (t)

King Crab Capture Has Collapsed Global Shrimp & Prawn Capture Peaked in 2003

150,000 4,000,000

112,500 3,000,000

75,000 2,000,000

37,500 1,000,000

0 0
1950 1959 1968 1977 1986 1995 2004 1950 1959 1968 1977 1986 1995 2004
King Crab Capture (t)
Global Shrimp & Prawn Capture (t)
35

Everything Outcomes

Peak Food
Increasing&World&
Popula7on&&&Increasing&

Peak
Soil
Increasing&
PerECapital&Resource& Water&
Consump7on Demand
Peak&Oil

• It
takes
between
Aquifer&
Deple7on

200
and
1000
years
Higher&Electricity&
Demand
Higher&Fuel&
Prices
Peak&Gas Peak&Coal
Climate&
Change

or
more
to
create
Increasing&
More& Glaciers&and&
Biofuel& More&

just
1
inch
of
Produc7on&
(Food&v&Fuel)
Severe&
Weather
Snowcaps&
Mel7ng
Draughts

topsoil Higher&Plas7cs&
Prices
Higher&Electricity&
More&
Floods&in&
Some&
Increasing&Water&
Scarcity&In&Some&
Soil&
Prices Deple7on
Regions Regions

• Worldwide,
soil
is
Higher&Pes7cides&
Prices

being
eroded
away
Higher&Fertalizer&
Prices
More&Crop&Losses

10
to
40
(mes
Higher&Food& Lower&Food& Higher&Produc7on&&&

faster
than
it
is
Demand Supply Transporta7on&Costs

being
replenished Higher&Food&
Prices

36

Everything Outcomes

Mad Max or The Jetsons?

• Renewable
Energy
Tehno-‐Utopia
– Electric
Cars
– High
Speed
Trains
– Wind
&
Solar
• Collapse
Dystopia
– Food
Shortages
– Economic
Depression
– Resource
Wars
37

Introduc(on Economics Subs(tutes Effects Outcomes

Or somewhere in the middle...

• “In
our
view
global
oil
demand
peaks
in
2016,
with
oil
prices,

before
a
long,
tandem,
decline.”
– Deutsche
Bank

• Peak
Demand
&
Painful
Transi(on
– Oil
Spikes
and
Recessions
– Basic
Materials
Get
More
Expensive
– Efficiency
Improvements
– Electrifica(on
of
Transporta(on

38

Introduc(on Economics Subs(tutes Effects Outcomes

What You Can Do
• Home
– Living
in
a
walkable
neighborhood
• Transporta(on
– Enjoy
cheap
interna(onal
travel
while
it
lasts
– Buy
a
fuel-‐efficient
car
• Community
– Join
a
local
sustainability
group
• Poli(cs
– Vote
for
people
who
understand
the
issue
and
are
proposing
sustainable

solu(ons
• Career
– Work
in
an
industry
that
will
benefit
from
peak
everything
(not
an
airline!)
• Personal
Finance
– Invest
for
Peak
Oil
(Buy
My
Book!!)
(wjm228@cornell.edu)
39

Peak Oil & Peak Everything Lecture at Cornell

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