Sunday, October 12, 2014

Peak oil is here: the view from Barbastro

Antonio Turiel, well known for his blog "the oil crash", speaks at the international meeting "Beyond Peak Oil" organized in Barbastro by UNED. It looks like we are staring straight at the peak's ugly face.

When I started working on peak oil, around 2001, it was an intellectual game that I played with others interested in the same subject. We listed resources and reserves, we made models, we plotted curves, we extrapolated data, and more of that. But the peak was always in the future. Some models had it in a few years, others in a decade or more. True, it never was a remote future, but it was not the present, either. We knew that the peak would bring a lot of problems, but we couldn't really visualize them.

Then, we discovered that oil was not the only resource destined to peak. We discovered that the peaking mechanism is very general and affects everything that can be overexploited. There was peak gas, peak coil, peak uranium and - in time - "peak minerals", which was the origin of my book "Extracted". Somehow, peak oil receded to just one of the many peaks expected in the future; still important, but not really so fundamental as we had thought at the beginning. I never lost interest in peak oil, but it sort of moved from a central position to the background of my interests.

But things change, and change fast. Two days of conference in Barbastro were a hard reminder that oil is still the most important resource in the world. At the conference, a number of impressive speakers lined up to show their data and their models on peak oil. Antonio Turiel, Kjell Aleklett, David Hughes, Gail Tverberg, Michael Hook, Pedro Prieto. From what they said, it is clear that the future it is not any more a question of arguing about resources and reserves, lining up barrels of oil as if they were pieces to be played on a giant chessboard. It is not any more a question of plotting curves and extrapolating data. No: it is more a question of money. We are not running out of oil, we are running out of the financial resources needed to extract it.

During the past years, the oil industry has spent enormous amounts of money to make an immense effort in developing new resources. Up to now, these resources, especially shale oil and shale gas, have done the trick, growing fast enough to compensate for the decline of conventional resources. But this success has been hugely expensive and it can only be short lived. As Arthur Berman said, "Production from shale is not a revolution; it’s a retirement party." Now, there is nothing on the horizon that could repeat the small miracle of shale oil and gas, which managed to postpone the peak for a few years. The party may well be over.

What gives the game away are the data showing that capital expenditures ("capex") in new projects are falling and that the industry is pulling out of the most expensive projects. It is a no-win game: the more you extract, the more you need money to keep extracting. But the more money you need, the lower are your profits. And when the mighty financial market realizes that profits are falling, then it is the end of the game: no money, no oil.

So, peak oil is here, in front of us. It may be this year or next year; or maybe even a little later. But it is not any more an abstract intellectual game: it is directly affecting our life. Look at the world around us: don't you think that there is something deeply wrong with the very fabric of what we call, sometimes, "civilization"? That something could very well be peak oil.

We started working on peak oil thinking that if we could have alerted the world of the danger ahead, something would have been done to solve the problem. We didn't succeed: something has been done, but too little and too late. Now we are going through the peak and looking at the other side. What we are seeing is not pretty; we can just hope that it won't be even worse than it seems to be.

I would like to thank David Lafarga Santorroman and the whole staff of UNED for their enthusiasm and dedication in organizing this second meeting on peak oil in Barbastro. For a detailed description of the meeting, see this post by Antonio Turiel (in Spanish)



Ugo Bardi is a member of the Club of Rome, faculty member of the University of Florence, and the author of "Extracted" (Chelsea Green 2014), "The Seneca Effect" (Springer 2017), and Before the Collapse (Springer 2019)