International Energy Agency Reports Peak Oil Happened in 2006
By Matthew Toplikar /
2010 IEA Peak Oil graph

The Beginning of a New Era 

It can no longer be labeled a crackpot theory, a distant prediction, or a doomsday scenario.  It's official.  Peak Oil was reached in 2006.  This is the assessment of the International Energy Agency-- the intergovernmental organization that advises nearly 30 industrialized nations, including the U.S.

Although this story has been reported in various news organizations like The New York Times, National Geographic, and Reuters, it has failed to make it into the national consciousness, and its implications for the future are even less well known.

Understanding Peak Oil

For those who are still playing catch up, 'Peak Oil' is a term used to describe the point when we reached the maximum amount of oil that will ever possibly be extracted from the ground.  After that moment in 2006, the amount of oil extracted each year has been less, and will now decline steadily into the future.  This doesn't mean we're on the verge of using all of the earth's oil.  However, as years pass, the methods used to extract the declining oil supply will become increasingly more expensive-- leading to a never ending rise in oil costs.  It should also be understood that both the U.S. and world energy needs are constantly growing.

What's important to realize is that perpetually rising oil costs will affect more than just your car's gas budget.  Unfortunately we live in a society that is completely dependent on the historically cheap energy.  When an economy is built around the fast, and inexpensive shipment of goods and materials, and the continuous ability to mass produce technologies and agriculture, an energy crisis hits every part of the production and distribution system.  Suddenly everything from food and clothing to cell phones and refrigerators become more and more expensive.

Finally, it's important to make the distinction between Peak Oil and Climate Change.  Though they share ideas for solutions, remember that Climate Change is an environmental problem while Peak Oil is an economic/energy problem.


Common Misconceptions & Real World Challenges

This is the point where most people go into denial.  As what this actually means for everyday life starts to sink in, the brain quickly formulates painless solutions and rational arguments for why the problems will be easily fixable.  Here are the most common ideas and why they won't be a silver bullet to our problems.

1) "Oil companies will just find more oil, or ramp up offshore drilling.  Didn't I just read about a recent oil discovery in the news?"

Sadly neither offshore drilling nor recent discoveries will offset rising oil costs.  First we must understand that although oil fields are still being discovered, these discoveries peaked in the early 1960s and have continually dropped since then.  So when you hear things about a 50 million barrel oil discovery, realize that while this might sound huge, historically such a discovery isn't very much.  The U.S. alone uses over 20 million barrels of oil PER DAY.

When it comes to offshore drilling, everyone now realizes the consequences of accidents while drilling in places like the Gulf of Mexico.  What people don't understand is how much more expensive offshore drilling is.  Where a conventional, land based drill might cost between $1-15 million total, a deepwater rig is estimated at between $200,000 to $400,000 PER DAY-- with a single well costing $100 million.


2)  "Everyone will have to get hybrid and electric cars."

While this is a good idea in theory, there are a large number of real-world challenges that accompany it.  First off it will take decades to replace our entire fleet of cars on the road.  Because the major car manufactures are making only a small percentage of hybrid cars and generally no electric ones at the moment, the design, engineering, and production of this new line of cars would need to happen very fast. 

Then of course, not everyone will be able to automatically buy a new car simply because we're in an energy crisis.  Not to mention the fact that increasing oil prices will cause increased manufacturing costs on the hundreds of millions of cars that would need to be produced. 

We also shouldn't forget that personal cars are not the whole problem.  Some of the real technological breakthroughs will have to happen in large trucks used for shipping the goods and materials that drive our market.

Finally, we'd need an abundance of electricity to run our new cars and trucks, and unfortunately there's simply not enough coal left to meet that demand.


3) "So we'll need to switch to different energy sources like nuclear, wind, and solar."

It is true that we will need to switch to alternative sources for our energy, however each of these comes with its own set of problems--mostly dealing with time and money.

First and foremost is the issue of cost.  Nuclear power plants are not cheap.  It takes a tremendous amount of capital to build and maintain them over the years.  This power-to-dollar ratio is much less efficient than that of oil's.  In addition, the Uranium used to run nuclear power is a finite resource that might be already at peak production

Another major challenge when it comes to Nuclear technology is that we still haven't figured out what to do with the toxic waste.  The best idea that's been come up with so far is that we dig a very deep hole in Yucca Mountain near Nevada's 60-year-old Nuclear Test Site.  Then we would ship nuclear waste from around the country to be stuffed into that hole.  There are many problems with this scenario, including the seismic activity of the area, possible shipping disasters, and the risk of it affecting the groundwater of millions of farmers and citizens.  Because of these reasons Nevadans REALLY don't want this to happen and have been fighting it politically for decades. 

But when it comes down to it, the biggest problem is with storage space.  Unfortunately, Yucca Mountain would simply not have enough room to store the heightened amount of waste produced by the dozens of new nuclear plants needed for our future power demands.  Even at present rates, nuclear waste would exceed the storage space in less than a few decades.

Wind power has a great amount of potential for helping ease the problems of increased oil expenses.  However, one problem is wind's variability and how that effects the electrical grid.  It's been tabulated that just a few mph decrease can cause a turbine to lose 10% of production. This is a fixable problem but not a cheap one.

This is trivial compared to the largest problem with relying on wind energy, which is the sheer volume of turbines we would need to produce.  Currently, wind power accounts for less than 2% of electrical energy produced in the U.S.  Though it would be possible, a massive undertaking costing in the hundreds of billions, if not trillions of dollars would need to take place to move our power needs to a wind-based system.  This will also take decades, and for us to produce an order of such magnitude, we will have to do it while our energy prices are still low.

Many of the same problems of switching to wind power also apply to solar.  Again, variability due to weather is a big factor, and though it is a growing industry, it also has a long way to go to meet our demands.  Currently, solar power accounts for less than 1% of world energy.  Like wind power, it would need to increase production exponentially to meet our power needs.  However, solar technology is much more expensive than wind and coal technology.  In most cases photovoltaic cells require more energy to produce than can be harnessed in their lifetimes.


Electricity Production Costs Per Kilowatt Hour

Coal:  4-6¢

Nuclear:  11-15¢

Wind:  4-6¢

Solar: 15-30¢



Where Do We Go From Here?

While it's true that none of these technologies will ever be as cheap as oil, that doesn't mean we shouldn't be pushing for their fast implementation.  There is no perfect solution to this problem, but there are better scenarios we can get ourselves into, and the longer we wait, the more expensive and improbable it becomes.

The first step is to push this problem into the national consciousness, while also putting pressure on our elected leaders.  It's important to be realistic about the fact that there isn't a lot of urgency going on about this issue.  Exposing friends and family to the problems of rising energy costs will help move the discussion into the mainstream consciousness.  A very realistic goal is to create momentum on this topic and make it an issue in the next election.

Smaller steps on local levels will also help ease the pain.  Supporting independent, regional farmers can be a key factor in reducing our dependancy on long-distance food shipping.  In addition, putting pressure on city planners to reduce urban sprawl will be a good step in helping personal transit issues.

For other ideas, check out Films For Action's Peak Oil, and Solutions sections.


For more information please go to Richard Heinberg's webpage.  He is the leading researcher on the subject.

Also, if you'd like to read it, here's the IEA's "World Energy Outlook" that spawned this article.

Matthew Toplikar (Dec. 2010)

4.4 ·
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International Energy Agency Reports Peak Oil Happened in 2006