Peak oil and natural gas—Are we there yet?

During the 1970s, OPEC’s restricted oil exports and surging energy prices stimulated a global search for energy outside the Persian Gulf. Federal policies were developed to encourage energy efficiency and renewable energy and to bring lower grade, more expensive forms of fossil fuels into the marketplace.

Oil company teams were sent around the globe to hunt for more oil. The discovery of natural gas in the North Sea and oil in Alaska helped weaken the Middle East cartel’s strength. Dramatic gains in energy efficiency helped decrease our demand for energy.

Knowledge of oil field basins improved tremendously over the years. According to L. Ivanhoe, an oil geologist and consultant, during the 1970s and 1980s, the total amount of oil in the five largest oil fields was known within six years of their discovery.

When the Reagan administration convinced Saudi Arabia to flood the marketplace with oil, prices fell to less than $10 per barrel, undercutting efforts to use energy efficiently and develop alternative sources of energy.

When oil prices collapsed in 1986, oil companies consolidated and reduced their exploration staffs. As the discovery rate of large new fields fell dramatically, the focus for energy companies shifted to getting more production from old fields rather than looking for new ones. Energy demand from China and India increased after the falloff in discovery.

Still, a question remains: Does peak oil and natural gas result from having discovered all the large fields in the world or from not looking for them?

For some energy economists, the current energy situation is the 1980s all over again. It was a manmade crisis of energy shortages, high prices, enormous profits, increased freedom to exploit resources and eliminated environmental restrictions on energy production.

Some advocates of renewable energy fear the current energy crisis could be followed by a glut of energy supplies undercutting the past decade’s dramatic growth of renewables. Paul Fenn of Local Power in California fears massive importing of liquefied natural gas to his state will undercut their dramatic increase in renewable energy.

During the National Science Foundation’s 1969 Arctic Studies course in Quebec, we learned of immense supplies of oil and natural gas around the Arctic Circle. Two years ago, an Icelandic political leader commented to us that global warming and Arctic ice melting might increase energy development in the Arctic and allow a longer shipping season.

According to Ivanhoe Energy, “heavy oil represents a massive world resource . . . twice the size of [existing conventional] oil reserves.” Its most significant deposits are found in Western Canada, Venezuela, Russia, the United States and the Middle East. While the deposits are well known, their presence in the marketplace is limited by technical and economic factors. As “a thick, viscous, tar-like” substance, it is difficult to pump from the ground and ship via pipeline. Technologies to make it more manageable come at high energy and environmental costs.

Large amounts of natural gas exist, but economic and environmental costs to bring it to the marketplace are substantial. Some experts estimate liquefied natural gas will need a minimum price of $7 per therm to be economically viable.

If another 20 years of energy gluttony is possible, where will the energy come from to make the transition to efficiency and renewable energy at the end of that time? Substantial amounts of resources and energy are required to build an energy system for the modern world and its immense population.

Years ago, knowledgeable people suggested that resource scarcity would lead to resource wars, environmental degradation and a massive dieoff of human populations. Since the last 20 years of economic growth has concentrated wealth in fewer hands and left much of the world’s poor and middle class worse off, will the neglect of human needs as witnessed in New Orleans become the fate of humanity?

Rather than wait for others to determine our fate, it is time to take personal and community action to use energy more efficiently and increase the use of renewable energy sources. We can start with our homes and businesses, proceed to fire, police, park and hospital systems, then move on to municipal and state facilities.

From the Nov. 2-8, 2005, issue

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