Peak oil remains an issue

By Robert and Sonia Vogl
President and Vice President
Illinois Renewable Energy Association

We were both surprised and pleased that Chris Schneider of Honda Motorwerks in LaCrosse returned to being an important presence at the annual Renewable Energy and Sustainability Fair. He is a long-standing advocate of hybrid electric vehicles and always provides an up to date presentation on progress in providing cleaner transportation options. His presence supplements the fine presentations by Tom Brunka on electric vehicle conversions, Allen Penticoff on sustainable cars of the future and Jeff Green on amazing batteries in our future.

Schneider acknowledged that low gasoline prices are negatively impacting the sales of hybrid and electric vehicles but believes as many others do that low gasoline prices may not last very much longer. He did point out the existence of impressive savings on used electric vehicles. Brunka took advantage of the low prices and brought his newly purchased used electric vehicle to the Fair from Milwaukee.

Given the volatile history of energy prices, it appears reasonable to assume the cost of gasoline will rise again. James Kunstler, an early advocate of peak oil, believes we have another two years of cheap oil before prices head upward. In a lengthy paper Roger Baker estimates we have three years of affordable driving before the current fracking boom declines allowing for a steep rise in gasoline prices.

The Hirsch report of 2005 predicted it would take 20 years for the auto industry and society to adjust to the anticipated arrival of peak oil. Conventional oil did peak in 2005 but the unanticipated dramatic increase in fracked oil has obscured the decline in conventional oil and delayed a transition to electric vehicles, mass transit and the hoped for hydrogen powered economy.

As pointed out by Roger Baker and experienced by alternative advocates, it is difficult to convince the driving public to change behavior when they witness low prices at gasoline pumps. The expected rise in gasoline prices is dependent on how long the shale oil production boom lasts. As numerous critics have pointed out, fracked oil sources have a short life with the best spots exploited first, but firms continue to pump oil at low prices in order to avoid bankruptcy. The profits some firms experienced came from selling their leases to other firms.

While fracking has added more than three million barrels of tight oil and liquid condensate fuel per day to U.S. supplies, it is not expected to continue at that level much longer. Additional supplies can come from deep sea and Arctic sources but they are costly. As large scale conventional sources of oil continue their decline and countries use more of their own oil and export less, supplies will tighten and costs will increase. A key issue is whether the decline in supplies will be gradual or sudden.  Obviously there is always the possibility that supplies could be dramatically disrupted by war.

A common response to major disruptions has been gas rationing and reduced driving. However, securing an electric vehicle at a bargain price or moving to a location requiring little to no auto transportation could be a better choice.

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