Peak Oil

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Peak oil must be a meme whose time has come. First this thread, then a review on SBS tonight for "Crude Awakening", a peak oil movie. I read a long article in The Atlantic about a year ago describing a series of peak oil conventions in the US -- the participants ranged from serious scientists to wacko survivalists (or vice versa, for all I know). But of course it's worrying. I'd suspect the whole push for nuclear is really a response to this problem, and not to global warming. Our leaders are fools.

Might pass on that new Kluger.
 

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And of course, as the website points out, nuclear energy is reliant on oil technology to be viable.
 
I’ve been reading stuff on Peak Oil since late 2000. The first graph in the website Ford linked is by Dr Colin Campbell. Campbell is an ex chief geologist for Amoco and has worked for BP, Shell, Exxon, Texaco and Chevron Texaco all over the world for about 40 years. He has mapped, every oil and gas fields ever discovered ie those no longer in production and those still in production. He has made projections based on the past activities and has come to the conclusion that peak oil is sometime between 2006 and 2010. He’s been banging on about this for almost a decade.

The thing I like about Dr Campbell is that he is an Irishman so to explain how the theory of peak oil works he uses 3 pints of Guinness. The basic theory is that as you start to sip the Guinness its easy to drink as you get plenty of beer and little head, however as you get to the bottom of the glass it’s harder to get the beer out as you manly have the head component. The same conditions apply to an oil well. It gushes out at first but getting the last 30% or so out, as it slows right down and becomes more expensive. “Eventually it's the immutable physics of the reservoir. The pressure is falling. It isn't a single, simple pool of oil in the ground. It's complex conditions. We tap smaller and smaller parts of fields...It's difficult, it's slow - I stress slow. It just doesn't pour out of the ground at 50,000 barrels a day.”

There have been a couple of great shows on TV lately that are worth looking at on line and if you are really interested you can buy the DVD. I have both on tape and will keep them as reference documents.

Four Corners in July last year had a great show on Peak Oil. Their link is
http://www.abc.net.au/4corners/content/2006/s1680717.htm

If you go to the right hand side of this page you will find links to a broadband version of the program and also there is a link to the transcript, which is a good read in itself.

There also is the Further Resources link
http://www.abc.net.au/4corners/content/2006/s1682118.htm
which has many great links to this subject. A couple of good ones are;

http://www.cbc.ca/news/background/oil/
This is the summary of the price of oil over the last century. People forget that in 1973 the price of oil quadrupled in a 6 month period. A lot of that was driven by the Yom Kippur war between Egypt and Israel, but the OPEC nations were driving up prices before that. Could you imagine if you went from paying $1.30 a litre to $5.20 by Christmas?? That change in prices started an 18 year stagflation period in this country which was repeated around the world. The doubling of Oil prices in 1979 was just as devastating to world economic growth and locked in the stagflation effects of 1973.

http://www.aspo-australia.org.au/
Is the website for the Australian Association for the Study of Peak Oil and Gas. This is mainly a lobby group set up by the industry but has a few politicians who are members/contributors from both sides who are converts and worried about the in action of the Oz government.

One of the many interesting things discussed in this 4 Corners story is the position taken by the Saudi’s. The volume of their oil reserves is a state secret and for the last 20 odd years they have always listed their oil reserves as 260 billion barrels. Their last big oil discovery was in 1969 the huge Ghawar field. The question is how much longer can they keep pumping millions of barrels a day from that field?

The other great ABC doco that was broadcast on the 24th May is Crude. Their website is;
http://www.abc.net.au/science/crude/
This is as good a doco as I have seen and is not as hysterical or pants wetting as I assume the A Crude Awakening appears to be from the shorts I’ve seen. I will try and catch it this week.

Crude, is produced by Australian scientist and filmmaker, Dr Richard Smith. To sum up from his explanation of the doco and the promo pieces:

We all know it's a fossil fuel, but what does that mean? I for one, wanted to know more, and the more I delved into the amazing story of oil, the more it became clear that I was diving into a mystery that only now could Science begin to answer with some clarity. The more pieces of the puzzle that came together, the more I realised that this was a story everyone should know.
From the food on our tables to the fuel in our cars, crude oil seeps invisibly into almost every part of our modern lives. It is the energy source and raw material that drives transport and the economy. Yet many of us have little idea of the incredible journey it has made to reach our petrol tanks and plastic bags.

Coming in the wake of rising global concerns about the continued supply of oil, and increasingly weird weather patterns, Crude spans 160 million years of the Earth's history to reveal the story of oil; from its birth deep in the dinosaur-inhabited past, to its ascendancy as the indispensable ingredient of modern life.

Filmed on location in 11 countries across five continents, the program's award-winning Australian filmmaker Richard Smith consults the leading international scientific experts to join the dots between geology and economy and provide the big-picture view of oil.

Crude takes a step back from the day to day news to illuminate the Earth's extraordinary carbon cycle and the role of oil in our impending climate crisis. Nearly seven billion people have come to depend on this resource, yet the Oil Age that began less than a century and a half ago, could be over in our lifetimes.

As he says in the doco there is an Irony of Oil. It took a super greenhouse earth to create our richest oil deposits. Ironically, by using oil up we may recreate the toxic conditions necessary to form new supplies. Oil lives on. Will we? http://shop.abc.net.au/browse/product.asp?productid=744520


I gotta say that some of the implications of Peak Oil are scary, mainly the inflationary effects and the political implications. Given that at the moment we produce about 84mil barrels a day and use about 81mil barrels a day, depending on how cold the winter is in the northern hemisphere, the estimate is that by 2020 with India and China wanting more oil we will be using about 120mil barrels a day and from existing sources we will only be producing about 65mil barrels a day. We could see the stagflation of the 70’s and 80’s return.

The politics of Peak Oil will also make life interesting. How will the USA and the West handle China and India becoming dominate players and effecting their lifestyles by driving up oil prices? The US current account deficit will just get larger and larger. Will the Yanks go after the oilfields of “rogue” states like Iran and Venezuela??

There are alternatives and they will become more feasible as the price point changes. The trouble will be in the transition period. You can’t change over 800 mil vehicles in the west to run on non-oil based fuels over night.

There also is little incentive for oil companies to invest in the future alternatives yet. In 2006, three of the four largest corporate profits were made by oil companies. First was Exxon with $USD33bil followed by Citigroup then Shell and BP. One of these two made $17bil. Why would senior executives and the board invest $billions in long term investments when they know the price of oil will only go up, they will only be in charge for 5 to 10 years, there is 30 to 40 years supply of oil, their bonuses are driven by their profit levels, the value of their shares and options are driven by profit levels and investment in alternatives will only guarantee a hit to the bottom line and there is no certainty these long term investments will pay off.

The alternatives are there, the economic good times of the last 15 years wont last and our grandkids will have it a lot tougher than we’ve had it, but we are along long way from wrist slashing disaster some commentators go on about.
 
Very interesting thread.:thumbsu:

Thanks FF for bring to attention and REH for comprehensive info post.

The website appears matter of fact and avoids too much emotive hype but certainly nails the significance of most pressing & influencial issue facing the planet. Recommended to all

I figure human beings would have been better off not expanding technological influence so quickly over last century or so... R Dawkins writes in book God Delusion something like perhaps in 50 years the new generation will be complaining "What you just burnt all of that Oil?"
 
Great thread and brilliant post by russell. Well put and covers most of the bases. More than 500,000 items are made from oil. It enables us to grow more food faster, develop medicines, technology and research at an increased rate, provide a myriad of cheap, convenient 'luxury' items and it will be interesting to see how mankind handles the transition away from oil in the next 40 years.
For decades now we have known that this point in time would come, and it is now, in the next decade, that we will start to see how we deal with our addiction to this elixir that gives us so much, and could be a painful panacea during withdrawl.
 
Last night on Lateline Business they had an interview with Dr Roger Bezdek. He has written 2 reports for the USA Department of Energy on how to mitigate the possible effects of Peak Oi. DR Bezdek is spending 2 weeks in Oz talking to government and industry leaders.

The Australian Association for the Study of Peak Oil and Gas has brought him to Oz and his reports and info on him is available as the ASPO link I mentioned above. In the previous post I forgot to mention that the ASPO was set up by Dr Campbell and it has 10 chapters around the world inc Oz.

Dr Bezdek's interview can be vodcast or podcast at the Lateline Business web page. The transcript isn't up yet, but when it is I will post it. See

http://www.abc.net.au/lateline/business/items/200706/s1956166.htm

From the ASPO in Australia about us web page.
The Australian Association for the Study of Peak Oil and Gas is a nationwide network of professionals working (as volunteers) to reduce our oil vulnerability. We aim to bring the probabilities, risks and opportunities that Peak Oil presents to the attention of decision-makers.

We are part of a network of organisations around the world affiliated with the original Association for the Study of Peak Oil and Gas (ASPO) founded by Colin Campbell and Kjell Aleklett. The formation of ASPO-Australia is an initiative of the Sustainable Transport Coalition. Our patron is Andrew McNamara MP, chair of Queensland Govt Oil Vulnerability Task Force.
 
From the Lateline Business link in my previous post.

President of research firm Management Information Systems Dr Roger Bezdek discusses the economic dangers of peak oil with Ali Moore.

Transcript
ALI MOORE: Well, as we said earlier, the price of oil reached a 10 month high yesterday making a debate about the realities of peak oil timely. Peak oil is when the world's oil production literally peaks before going into terminal decline with dramatic ramifications for global economy. Just when that time will come is the subject of intense debate, though the issue receives far less coverage than the related focus on climate change. One man who's urging global action is Dr Roger Bezdek, president of the Washington-based research firm Management Information Systems. He's written two reports for the US Department of Energy on how to mitigate the possible effects of peak oil and he's spending the next two weeks in Australia talking to Government and industry leaders. He joined me from our Canberra studios earlier this evening.

Dr Roger Bezdek, welcome to the program.

DR ROGER BEZDEK: Thank you, pleasure to be here.

ALI MOORE: Peak oil is a theory first talked about in the 1950s. Are we there yet?

DR ROGER BEZDEK: We're getting - we're probably getting close. As far as the experts can tell, it will probably occur within the next 10 or 12 years, probably sooner rather than later. However the point is that the implications are so severe that even if it's as long as 15 or 20 years away, it's almost too late to take many of the measures that are required to deal with it.

ALI MOORE: That said, there have long been predictions, haven't there, of the imminent depletion of oil supplies. It was said it would happen in the '70s and it didn't. The man who came up with the peak oil theory said it would happen in 1995, and it didn't. US Department of Energy says we won't be there even by 2030.

What makes you right?

DR ROGER BEZDEK: You are correct, for the past 150 years there have been many false predictions of the world running out of oil or running short of oil or peaking oil. Some of the predictions have been correct, for example, King Hubbard, in 1957, predicted that US oil production would peak about 1970. It actually peaked in 1971. The problem is now that we've had 50, 60, 70 years of exploration of - the entire earth, the entire world, has been explored for oil. For the past 25 years the world has been consuming much more oil than it has been finding and the ratio is getting worse rather than better. For example, last year the world discovered about 6 billion barrels of oil and consumed about 28 billion. This can only go on for so long and is why I'm relatively pessimistic that we'll see world oil peaking within about the next decade or so.

ALI MOORE: So you don't see or believe the argument that the greater the technology, the greater the technological development, the more likely that not only will we find more, but previously impossible wells will become viable?

DR ROGER BEZDEK: There's no doubt that technology will assist us and we'll find more and more oil. The problem is that the world is already consuming, producing about 87 million barrels a day of oil. Projections are the world will need, by 2030, 120 million barrels a day. The new giant fields simply aren't out there and most of the world's oil-producing regions have already peaked - are in decline, declining at the rate of 2 or 3 or 4 per cent a year. Right there it tells you you have to discover at least 2 or 3 million barrel a day every year, just to stay even. And we can't stay even, the world requires 2 or 3 per cent more oil per year. It's just an unsustainable trend.

ALI MOORE: Even with the focus on climate change and the impetus that's giving to finding alternatives and I guess also to making alternatives more competitive?

DR ROGER BEZDEK: Well, climate change is indeed a very serious problem and I would say that climate change and oil peaks are the two most serious, intractable long term problems that the world faces. Many of the problems with climate change are contrary to what is required for solving the peak oil problem. For example, one of the solutions or partial solutions to peak oil is ramping up production of colder liquid fuels which happen to produce a lot of greenhouse gases. So if you're trying to solve one problem independently of the other you can't do it, they have to be viewed and solved in tandem.

ALI MOORE: So how do we mitigate this threat?

DR ROGER BEZDEK: The mitigation of peak oil is required on both the demand side and the supply side. On the demand side we have to make the world stock of vehicles much more fuel-efficient as soon as possible. We also have to introduce policies and incentives that will make the world's population less dependent upon driving vehicles and automobiles. Increased use of mass transit, rail system, smart growth, what have you. On the supply side, we have to pursue all of the supply options that are out there for liquid fuels, including oil shale, oil sands, colder liquids, renewable technologies, biomass, bio-diesel, electrical vehicle, plug-in electrical vehicles, et cetera. So a massive effort is required both for the supply side and the demand side to address the problem.

ALI MOORE: A massive effort and I guess none of that is particularly new. What will be the impetus for people to wake up and say we must do this now, not tomorrow, but now?

DR ROGER BEZDEK: One impetus would be to wait until it's too late when there are actual shortages and the price of oil has increased dramatically. Hopefully we and the world will be smarter than that and see the problem on the horizon and begin to take some of these mitigation options well in advance, and let me stress that time is running out and we have to start implementing these initiatives as soon as possible.

ALI MOORE: Time's running out - in the context of a country like Australia, what would be the impact of peak oil? We already import something like 30 per cent of our energy requirements, we have massive resources though, what would be the impact here?

DR ROGER BEZDEK: Well, the potential impact in Australia could be quite severe. Petrol prices could increase dramatically, there would be shortages. There would be some sort of rationing. The entire country would be severely affected as your whole transportation system would be severely disrupted. People who have to drive to work, or to industry to commerce, would simply be unable to get there at any reasonable prices. The potential would be for massive economic and social dislocation.

ALI MOORE: Have you done economic modelling of what it would mean and would any industry sector be immune?

DR ROGER BEZDEK: Yes, we have done extensive modelling and there's virtually no industrial sector that would be immune. They would all be impacted to a lesser or greater degree.

ALI MOORE: At the same time, though, we're not seeing it reflected in investment trends are we? We've just seen a private equity group try to buy our national airline for $11 billion, and if any sector is exposed to the threat of peak oil, you'd have to say aviation is?

DR ROGER BEZDEK: Indeed and I think there's a real market failure here that people simply are not aware of the impending problems here and many of these investment decisions, several years from now, may look very foolish in retrospect.

ALI MOORE: So you've been talking - you're going to be talking over the next week or two to both industry and business. Today you've been meeting with the department of defence. What's been the reaction to your story?

DR ROGER BEZDEK: Well the reaction thus far, I think, has been contemplative listening, a lot of good questions have been asked but much of the information that I'm trying to get across simply is difficult to absorb because what we're looking at here is a very serious energy transition, the likes of which the world has never seen before, and many people are simply not aware of the problem itself, the magnitude of the problem or the magnitude of the efforts and the time required to resolve it.

ALI MOORE: Dr Roger Bezdek, many thanks for talking to us.

DR ROGER BEZDEK: Thank you.
 
Tommorow night, Thursday at 9.30pm on the ABC, Jeff McMullen's Difference of Opinion will look at Peak Oil, oil reserves and alternatives to oil to power motor vehicles.
 
Not sure what made Ford post and start this thread, but growing up on a farm, I may have been only 9, but I remember the oil crisis of 1973 and then 1979. Doing an economics degree and interested in policy development and government solutions, stagflation was something I always studied and until the recession we had to have in 1991, we always had at least 1 problem of high inflation, high interest rates and high unemployment between 1973 and 1991. Because of the long term effects of the 2 oil crisises we had all 3 at once for long periods of time.

Energy, apart from drugs, both leagal and illegal, has always been the most profitable and politically sensitive industry in the world since it's discovery. I knew that one day we would run out of oil. Around 2000 I started reading stuff about peak oil and that there isn't much difference between how much oil we produce each day and how much we consume. I started thinking about the stagflation effects of my youth again that would occur when the next oil crisis happens.

Also the last 5 years I have been involved with a technology development group. We have associations with 50 companies developing different types of techologies across the board. Some of them are into alternative energy and fuel systems industries. Mainly hydrogen fuels and fuel cell technology. Also we have been working with a couple of companies that are developing more efficient engines. Currently most engines only effectively use about 27% to 30% of the energy they burn, the rest is lost in heat transfers. A couple of the engines we have looked at are between 60% and 70% fuel efficient. So yeah, I have a bit of a vested interest, but my interest started long before I got involved in the technology development field.
 

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Peninsula Boy said:
All those things you mentioned REH are just the contradictions of capitalism at work.
Click to expand...

But where would life be without contradictions, paradoxes, conundrums, inconsistentcies, hypocrisies etc.
 
REH, Nearly all people whom I have spoken with on peak oil issues agree, energy sustainability at an acceptable price is the key.

I am keen on biofuels as replacement for fossil fuel oils given its sustainable nature. The higher the prices for crude become, the more economic biofuels will become.

This trend is already happening - ethanol production in USA.

We should however learn to live with higher energy costs. The affluent nations will pay a hefty price for future energy - we have all grown up with low cost energy which will at some point bite us badly.

Biofuels have their own challenges, fuel vs. animal & human feed arguments, less global land to do more with, corporate vs. family farming.

Interesting global developments ahead which most people are blissfully ignorant of.
 
Nice post oporto. A good summary of the problems, trade offs, history and challenging future we will face.

A couple of the companies in the group I'm involved with, that I mentioned in my previous post are involved in ethanol production. Howver rather than using food crops such as corn or sugar it involves using forest products. The chemical structure of most plant life is very similar so a lot more plants than the standard ones the media talks about can be used.

We are working with regional and federal governments in PNG and Vietnam, The World Bank and an agency of the UN ,along with private funders, developing several reforestation startegies along with using certain forest products to produce ethanol. The idea is to protect the existing forests, however, grow certain plants and trees that can be used for bio fuels and provide employment in the developing areas. Hopefully a deal we have been working on for over a year and worth over a half a billion will be finalised in the next few weeks.

Having several efficient engine technologies in the group, that run on bio fuels as well as conventional fuels, allows for some nice vertical intergration and synergies.
 
There was an interesting story on Lateline last night about Peak Oil. Tony Jones interviewed Richard Heinberg, one of the world's leading experts on of peak oil. You can watch the video of the interview on the link below if you don't want to read the long transcript I have posted below. The interview is almost 18 minutes long and covers a broad base of the oil price increases.

http://www.abc.net.au/lateline/content/2007/s2242621.htm

Nothing governments can do about rising oil prices: oil expert Richard Heinberg

Australian Broadcasting Corporation
Broadcast: 13/05/2008
Reporter: Tony Jones

Oil expert and author Richard Heinberg joins Lateline to discuss the phenomenon of peak oil.

Transcript
TONY JONES: Now to tonight's interview with Richard Heinberg. He's one of the world's leading experts on the phenomenon of peak oil. That's the point at which the world's oil reserves go into decline. The idea is that having reached its peak it's all downhill from there and there's evidence that global rates of oil discovery have been declining since the 1960s, and that new oilfields are becoming more and more inaccessible.

So as demand increases and supply decreases the price of oil goes up and up and up, as we've painfully experienced in recent years. No one really knows when we'll reach peak oil. It may have already happened, it may take another three decades. Why has the price of oil gone up so fast and so high in recent years? How much higher could it go and can anything be done to reverse this relentless process?

Richard Heinberg has written a series of books on the oil crisis including 'The Party's over', 'Power Down' and his latest 'The Oil Depletion Protocol'. I spoke to him a short time ago in Santa Rosa, California.

Richard Heinberg, thanks for joining us.

RICHARD HEINBERG, oil expert and author: My pleasure.

TONY JONES: Now let's start with the recent oil price predictions. Goldman Sachs is saying within two years oil could reach US $200 a barrel. Other analysts have a different view and say it could go down back to $40 a barrel. Where do you sit on this? What do you think is going to happen?

RICHARD HEINBERG: I think the price could lose some ground temporarily but over the long term there's nowhere for oil prices to go but up. And we could, in fact, see prices considerably above $200 a barrel within the next two or three years.

TONY JONES: What does this mean for governments like Australia? We're just about to have our Budget released in this country. The Federal, the new Labor Government came to power promising to try and do something about rising food prices in supermarkets and rising oil prices. It sounds like their hands are going to be tied for the foreseeable future?

RICHARD HEINBERG: Yes, I think that's true. I don't think there's anything that the Australian Government can do or the US Government can do about rising oil and food prices and by the way, these two things are connected. The rising oil prices create increased costs for farmers. Also the cost of shipping, food and just about everything else is increasing, so these high prices are going to have knock on effects through the economy. The airline industry is going to be hard hit and again, there's very little that governments can do other than to start planning for high oil prices We should be redesigning our economies to operate with less oil. Fundamentally that's the only sane policy response.. We can't just hope somehow for oil prices to come back down to $40 a barrel. It's not going to happen.

TONY JONES: I'll come in a moment to how governments could do that. But in the meantime, we had only last week the Noble Prize winning economist Joe Stiglitz on this program. He actually blames the Iraq war for the trigger that led oil prices to start spiralling. Do you agree with him?

RICHARD HEINBERG: Well, I thought the US invasion of Iraq was a terrible idea at the time and still feel that way, so if I thought that somehow the high oil prices could be blamed on that I'd be happy to do so. I think he maybe right that there were some minor trigger effect there. But really, the situation we're seeing now mostly has to do with the fundamentals of supply and demand. We have more countries every year in the category of oil importing nations and fewer countries every year that are able to export oil. That's the nub of the issue.

TONY JONES: Including former oil producing countries like Indonesia, for example?

RICHARD HEINBERG: And like Great Britain and Norway. Great Britain has now become a net oil importing country again after 30 years of being an exporter.

TONY JONES: Stiglitz takes quite a conservative approach in his book on the costs of the war. But he makes the point that before the war the futures market which usually gets these things pretty right, had already factored in the increasing demand from the boom economies like India and China and yet the increases that have happened are way beyond what the futures market expected, which is why he tends to blame the war. And he makes the further argument that the big Arab oil producing companies have decided keeping their asset in the ground and still making record profits is the way to go?

RICHARD HEINBERG: He's right on the latter point. There has been a definite change of attitude on the part of some of the Arab oil exporting countries, but it's entirely understandable. Look at Kuwait, for example. There was a little kerfuffle a couple of years ago when oil intelligence Weekly published an article suggesting that Kuwait's real oil reserves were only half of what that country had been telling the world and the Kuwaiti Parliament then went to the oil industry and said, "Is this really true? What are our real reserves?" The oil minister said, "I'll get back to you" and evidently still hasn't. The evidence is clear that Kuwait and a number of other oil exporting countries have overstated reserves pretty substantially, and these are countries which rely on oil exports essentially for most of their income nationally. So what are they going to do for an encore once the oil is gone? It really makes sense for them to slow down on production rather than pumping the oil out of the ground as fast as they can and be left with nothing for the future.

TONY JONES: Do we know the truth, though? The global oil industry has consistently revised oil reserves upwards over a period of time. It is estimated there's more than a trillion barrels left underground just from known reserves at the moment which would last for a considerable amount of time obviously?

RICHARD HEINBERG: Well, yes. If we could use those reserves at any arbitrary rate, the problem is oil is getting harder and hard tore get out of the ground. We've used the cheap, easy stuff. We've used the oil we could get from Texas and Oklahoma and even the North Sea and now what we're finding are oilfields in ultra deep water and places that are extremely difficult to access from a technical standpoint. We're also starting to get more from places like the Canadian tar sands where there's an enormous amount of resource in place, but it's not liquid oil. It's the stuff that has to be converted into synthetic fuel using enormous amounts of water and natural gas. Very resource intensive and environmentally ruinous process. So the easy glory days of the oil industry are over and just about everybody in the industry would agree with that statement.

TONY JONES: So you don't believe we may be facing a sort of oil embargo as we faced in 1973, but this time by stealth?

RICHARD HEINBERG: No. In 1973 what we saw was political and it was short term. What we're seeing now is long term. I don't think this is ever going to turn around. Most of the, even the Arab oil producers are producing flat out. They're producing as much oil bringing it to market as fast as they can. The only possible exception is Saudi Arabia and the Saudis may have as much as two million barrels a day in spare production capacity. We don't know for sure because there's no way for a third party agency to audit the Saudi reserves or even their production data. But evidence would suggest that they probably have some production capacity in reserve. That's about the only country that can say that.

TONY JONES: I suppose that is the key question. If they were hiding behind the notion of peak oil that notion is terribly unclear, because we may have already passed the peak oil point or, in fact, we may not pass it I think you acknowledge yourself for another three decades which puts a completely different time scale on the whole event?

RICHARD HEINBERG: There are a few holdout analysts who are saying we may not see global oil production peak for two or three decades, but they're substantially in the minority these days and becoming ever more so. I think that the evidence is lining up very strongly in favour of a notion of a near term global oil production peak. For the last two years oil declines have led oil advances, I think a pretty good argument can be made that we're there right now.

TONY JONES: So in the meantime, how much pressure is there going to be to open up brand new areas for exploration, parts of the Arctic which haven't been drilled and even the Antarctic which currently where oil drilling and exploration are forbidden because it's considered to be a world park at the moment?

RICHARD HEINBERG: There is tremendous competition to gain access to these areas. Russia, Canada and some other nations are laying claim to areas of the Arctic to be able to drill there in the future. This is not very prospective area. In other words, from a geological standpoint it's very unlikely we'll find substantial amounts of recoverable oil in the Arctic, and I think it's a sign of the desperation of the industry that there's so much excitement about going into a place that will have unprecedented challenges from a technical standpoint just in operating there. We don't have the equipment that can operate in the Arctic. It's going to be decades before oil can be commercially produced there and yet, we see this enormous competition for access to the place. I think it's, as I said, a sign of desperation.

TONY JONES: At what point in the price cycle does it become economic to convert coal into synthetic fuel, gas into liquids, for example?

RICHARD HEINBERG: Well, the technology for turning either coal or natural gas into liquid fuels is already in place. South Africa has been turning coal into liquid fuel for many years. A company called Sassal operates in South Africa and produces 150,000 barrels a day. That's only a small part of South Africa's oil consumption. They use about 450,000 barrels a day. Even in the one country using this technology they're not getting even a majority of their oil from it. So it's going to take an enormous amount of investment to build coal to liquids plants. These are very expensive facilities to build. We're taking a low grade hydro carbon, namely coal, we're putting it through an intensive process that costs about 40 per cent of the energy in the coal to produce a expensive synthetic fuel. Again, it can be done. I think probably the US Department of Defence is going to go in the direction of coal to liquids but frankly I think it's unlikely we'll see a very large scale implementation of this technology, just because it is so expensive and it's so inefficient from an energy standpoint.

TONY JONES: Then you have the incoming problems obviously of the economic viability of doing that once you add into it the global warming costs?

RICHARD HEINBERG: Well, of course, yes. We're talking about again an environmentally ruinous practice. The Sassal plant in South Africa can be seen from space. It's the greatest single point source of pollution on the entire African continent and that's just 150,000 barrels a day and the world is using 85 million barrels a day of liquid fuel. If we were to try to replace any substantial portion of that with coal to liquids we would be looking at a climate doomsday scenario.

TONY JONES: You've thought about this Richard obviously in great detail over many years now and your proposed plan for the world, in fact, is to produce a kind of global agreement similar in a way to the Kyoto Protocol which you call the oil depletion protocol. Can you tell us how that would work and how hard it might be to get such an agreement between competing economies?

RICHARD HEINBERG: I wouldn't pretend to suggest it won't be difficult to get that kind of agreement, but essentially it would be a protocol to reduce oil consumption globally and nationally and also oil production by the world depletion rate which is about 2.5 per cent per year. In other words of the oil that's left to extract out of the ground we're using about 2.5 per cent of that every year. If we reduced our consumption by that same amount that would stabilise prices and it would reduce the incentive for competition and perhaps even deadly competition in the future for access to the remaining supplies of oil in the world. I honestly see the oil depletion protocol as the only way forward that doesn't lead to global oil wars and to economic collapse.

TONY JONES: What do you think it would take for this to become top of the agenda, for example, in a new White House in Western governments around the world and indeed in the booming economies of China and India, what would it take to move that idea to centre stage?

RICHARD HEINBERG: Well, obviously it would take some political courage. Policy makers would have to understand once and for all that oil prices are not going down they're only going higher. So the only thing we can do at this point is to adapt to this new era that we're in of rapid oil depletion. That means that if we're going to save our economies we have to undo our vulnerability to oil scarcity and higher prices and the only way to do that is to reduce our consumption. Sweden has already taken this step. The Swedes have made it a target to become oil dependent by 2020 and there are a number of cities in North America that have made a similar kind of commitment. Portland Oregon, Oakland California, and a number of others have established oil vulnerability task forces and are looking at ways of reducing their city oil consumption quite dramatically over the next few years. Now this kind of proposal has yet to make it to the halls of Congress and the US or to Parliament in Australia, but I think it's important that the idea be brought forward as soon as possible, because the sooner we start reducing nationally our oil consumption the sooner we can stabilise prices and begin to adapt to the world that we're moving into.

TONY JONES: You raise this spectre of oil wars and future conflict over oil. What do you mean exactly? Where would you see that arising?

RICHARD HEINBERG: Well, what we're seeing is not just a likely decline in total oil production, but especially a decline in available oil exports, because as I mentioned earlier the oil exporting countries are seeing such rapidly increasing domestic demand. So the amount available on the global export market could decline by up to half just within the next 10 to 15 years. That's going to put enormous pressure on major oil importing countries like the United States and China. The US is the world's foremost oil importer, China is the world's second foremost oil importing countries. These two countries are going to head to head for access to supplies in central Asia, Africa, in the Middle East, and it's difficult to envision a situation in which that competition would not become very, very intense.

TONY JONES: Not so long ago, there were some senior neo conservative thinkers in Washington who were actually advocating the United States taking over Saudi Arabian oilfields. The implications of that are extraordinary, of course. Could you imagine ever reaching the point where that became seriously part of the administration's agenda?

RICHARD HEINBERG: Absolutely, yes. If there were to be a revolution in Saudi Arabia and the country were to be taken over by any political party or group that was not friendly to America's interest, then I think it's very likely that the US would invade.

TONY JOENS: Richard Heinberg, we'll have to leave you there. We thank you very much for taking the time to talk to us tonight on Lateline.

RICHARD HEINBERG: Thank you Tony, it's been a pleasure.
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TONY JONES: At what point in the price cycle does it become economic to convert coal into synthetic fuel, gas into liquids, for example?

RICHARD HEINBERG: Well, the technology for turning either coal or natural gas into liquid fuels is already in place. South Africa has been turning coal into liquid fuel for many years. A company called Sassal operates in South Africa and produces 150,000 barrels a day. That's only a small part of South Africa's oil consumption. They use about 450,000 barrels a day. Even in the one country using this technology they're not getting even a majority of their oil from it. So it's going to take an enormous amount of investment to build coal to liquids plants. These are very expensive facilities to build. We're taking a low grade hydro carbon, namely coal, we're putting it through an intensive process that costs about 40 per cent of the energy in the coal to produce a expensive synthetic fuel. Again, it can be done. I think probably the US Department of Defence is going to go in the direction of coal to liquids but frankly I think it's unlikely we'll see a very large scale implementation of this technology, just because it is so expensive and it's so inefficient from an energy standpoint.

TONY JONES: Then you have the incoming problems obviously of the economic viability of doing that once you add into it the global warming costs?

RICHARD HEINBERG: Well, of course, yes. We're talking about again an environmentally ruinous practice. The Sassal plant in South Africa can be seen from space. It's the greatest single point source of pollution on the entire African continent and that's just 150,000 barrels a day and the world is using 85 million barrels a day of liquid fuel. If we were to try to replace any substantial portion of that with coal to liquids we would be looking at a climate doomsday scenario.
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The technology development group I work with are dealing with a Victorian company that looks at converting the low grade brown coal of the Gippsland area into synthetic fuels.

From some product information documents I have

The Plant has a through put capability of 204,000 Tonnes of Coal per year and with a Fuel Litre out put of 97,920,000.

The Plant has the capability to produce:
1. Ultra-Low Sulfur Diesel (ULSD) with sulfur content of 10 parts per million
2. Aviation Fuels
3. Cooking Fuels
4. Lighting Fuels

.......

The process was invented in petroleum-poor but coal-rich Germany in the 1920s, to produce liquid fuels. It was used by Germany and Japan during World War II to produce ersatz fuels. Germany's annual synthetic fuel production reached more than 124,000 barrels per day from 25 plants ~ 6.5 million tons in 1944.

After the war, captured German scientists recruited in Operation Paperclip continued to work on synthetic fuels in the United States in a United States Bureau of Mines program initiated by the Synthetic Liquid Fuels Act .

The process was used in South Africa to meet its energy needs during its isolation under Apartheid. This process has received renewed attention in the quest to produce low-sulfur diesel fuel in order to minimize the environmental impact from the use of diesel engines.

The Process based on Fischer-Tropsch developments was further enhanced by an American Company Syntroleum the Liquid Fuels is being used by the US Air Force in trials and has produced over 400,000 gallons of diesel and jet fuel from the Fischer-Tropsch enhanced process at its demonstration plant near Tulsa, Oklahoma. Syntroleum is working to commercialize its proprietary technology via coal-to-liquid plants in the US as well as gas-to-liquid plants internationally.

On December 15, 2006, a B-52 took off from Edwards AFB for the first time powered solely by a 50-50 blend of JP-8 and Coal to Liquid FT fuel. The seven-hour flight test was considered a success. The goal of the flight test program is to qualify the fuel blend for fleet use on the service's B-52s, and then flight test and qualification on other aircraft.

On August 8, 2007, Air Force Secretary Michael Wynne certified the B-52H as fully approved to use the FT blend, marking the formal conclusion of the test program. This program is part of the Department of Defense Assured Fuel Initiative, an effort to develop secure domestic sources for the military energy needs. The Pentagon hopes to reduce its use of crude oil from foreign producers and obtain about half of its aviation fuel from alternative sources by 2016.
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Forgot this bit of info.

Ultra Low Sulfur Diesel (ULSD) has been introduced into Europe, America, Australia, Taiwan, Singapore and Hong Kong to name a few of the major users of Diesel Fuel.

Ultra-low sulfur diesel (ULSD) (also pronounced “sulphure”) is a term used to describe a standard for defining diesel fuel with substantially lowered sulfur contents. As of October 15, 2006, most on-highway diesel fuel sold at retail locations in the United States and Canada is ULSD.

The move to lower sulfur content is expected to allow the application of newer emissions control technologies that should substantially lower emissions of particulate matter from diesel engines, similar to changes that previously took place in the European Union.

Hong Kong:
In 2000-7, Hong Kong became the first city in Asia to introduce ULSD, with sulfur content of 50 parts per million (ppm). In addition, new petrol private cars were asked to meet Euro III standards from 2001. Since the introduction of the law, all fuel stations have started supplying ULSD since 2000-8.

Taiwan:
Beginning in 2007, Taiwan has limited sulfur in diesel fuel to 50 ppm, equivalent to the Euro IV standard.

Singapore:
The National Environment Agency (NEA) defines ultra low sulfur diesel (ULSD) as diesel fuel with less than 50ppm, or 0.005 per cent, sulfur content. On 16 Jun 2005, NEA announced that the use of ULSD would be mandatory beginning 1 Dec 2005. The regulation also offered tax incentives for Euro IV diesel taxis, buses and commercial vehicles between 1 Jun 2004 and 3 Sep 2006, pending a mandatory conversion to Euro IV-compliant vehicles in 2007.
 
Hmmm........a few people should have listened to Peter Garrett and Midnight Oil a few years ago back in the 80's when he was talking about oil shortages in the foreseeable future.

The next 10-20 years will certainly be interesting to see what develops in the western world as for too long we've just thought there was plenty of cheap fuel out there and now we have the other parties tightening the screws.
 
To put a domestic perspective on it, we complain about petrol prices, but does anyone you know really drive any less?

I reckon I'd have to be paying at least $4 a litre before I worried about it.
 
I got rid of my car 5 years ago. I can get away with it Sydney, I live not that far from a train line and if I really need a car I can hire one.

I actually sat down and did my sums and figured out with taxi's, trains, buses, odd hiring of a car, walking and cycling I'm better off by a few thousand a year and healthier.

But I wouldn't do this if I lived in Adelaide.
 
That would depend upon my next permanent job as at the moment I'm doing temp/casual work until I find something on a permanent basis so the destination changes quite a bit and public transport is on par with Adelaide if not going into the city.
 
An essential site to visit for peak oil information is:

http://www.theoildrum.com/

I also recommend reading the book 'the end of oil' by Paul Roberts

I'm presently writing a paper on peak oil. Basically the long we delay in innovating out of this dependence, the harder we screw ourselves.

Buckle in folks, thing arent going to get any cheaper in a hurry.
 
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