Peak oil and climate change. Which do we worry about most?

About 15 years ago I was co-founded Otaki Transition Town, part of a movement that focussed on both climate change and peak oil. We were predicting dire warnings of a fall off the cliff and reading books like “Why your world is about to get a whole lot smaller” by economist Jeff Rubin and “The End of Growth” and “The Party’s Over” by Richard Heinberg. Then when US discovered they could frack for oil and did so with great success, people forgot about peak oil and focussed their energies on climate change.

I was one of these. I joined Low Carbon Kapiti and focussed on climate.

This week the Pakistan floods and the European energy crisis are examples of climate mayhem and of energy peaking. Both are symptoms of overshoot of the earth’s capacity.

What causes overshoot? It’s the party we’ve been having for 200 years because we discovered a one-time bonanza of fossil energy beneath the ground and burnt it. We have grown the global economy and the global population using fossil energy for all this time and the process has been accelerating.

90% of all the fossil fuels used ever has been done so in the time I have been alive. 50% in the last 30 years. Globally we have used more fossil fuel every year but our stroke of luck is all going to come to an end.

The European energy crisis is because Russia is exploiting the end of cheap natural gas – it is using its power as a natural gas producer to force Europe into changing its NATO policies and to punish Europe for having supported Ukraine. The price of natural gas has risen tenfold recently, and, since natural gas is mostly used to produce electricity, and so they are experiencing eye-watering power prices. Factories are cutting production, lights are being turned off and citizens advised to use a facecloth instead of showering.

The UK, dependent on the global natural gas prices, is affected even worse. The situation is so bad that the far right Liz Truss is promising to nationalise electricity if she becomes Prime Minister.  So the exorbitant price of electricity in UK is turning politics upside down.

On August 30 Zero Hedge reported that the CEO of Shell said that the crisis may continue for multiple winters.

Pakistan floods are one of the growing number of freak climate events that shock us on TV. A large proportion of the country is underwater, over 30 million people have been displaced and more than 1000 have died. We see houses swept away by rivers, hungry refugees setting up tents wherever they can and untold suffering. The cost at the end of August 2022 is estimated to be $10 billion. Massive food shortages are predicted to be felt in 2023.  The event has been described as “cataclysmic” and “the climate event of the decade”

As the New York Times says.  “Pakistan this spring began experiencing record-breaking, drought-intensifying heat, which scientists concluded had been 30 times as likely to occur because of human-caused global warming.”

Won’t energy always be available?

So why did I say our fossil energy use is all going to come to an end? Won’t energy always be available? Sorry no. Not in the quantities that we have become used to.

Or the quality of energy. As Nate Hagens often reminds us, the amount of oil and natural gas used daily in the world is equivalent to 500 billion human beings working for us all day and night.

It is always shocking to discover that in this day and age of climate mayhem and promises of governments to decarbonise its transport, the world is still over 80% reliant on fossil fuel for energy. This graph shows it.

Quite a small portion of the energy is devoted to solar, wind and nuclear energy and under a growing economy can  only rise slowly. (New Zealand is less reliant on fossil fuels, at 65%)

Peak oil authors and bloggers were told they had been crying wolf. Yes, we got the date wrong but the wolf came in the end. We had not anticipated the enormous fracking boom in US and we had not factored in the role of the financial industry.

So have we passed peak oil yet?

Oil comes in two forms, conventional and unconventional. The latter is all the harder to extract oil. It comes from fracking, Canadian tar sands and deep sea mining and is of lower energy content. Because it is more expensive to extract, the oil companies make less profit and there is less net energy for society as a whole.  Currently fracking companies and tar sand companies are deeply in debt to major banks.

It looks as though they aren’t drilling more. CBS news said in March 2022, “As to why they weren’t drilling more, oil executives blamed Wall Street. Nearly 60% cited “investor pressure to maintain capital discipline” as the primary reason oil companies weren’t drilling more despite skyrocketing prices, according to the Dallas Fed survey.

Only 11% cited environmental, social or governance issues; 8% said they had difficulty getting financing; 15% cited other reasons.

“Investors in energy stocks have been a bit thrown off by the volatility, so they’re looking more for energy firms to pay back down their debt, or return money to shareholders, rather than going and investing in new wells — even if those new wells would be profitable,” Ashworth said.

In other words, many companies are choosing to enjoy their high profits rather than increase the supply of oil.

Rex Wyler of Greenpeace International writes in March 2020,

“The year of peak oil discoveries is behind us (1962), the peak of conventional oil production is behind us (2005), most major oil fields are in decline, oil quality and net energy are in decline, extraction costs are rising, oil companies have gone after the dregs in shale rock and tar sands.

The oil industry is in decline for completely natural reasons. The peak days of cheap, high-quality oil are behind us, and extracting the dregs – shale and tar sands – is expensive, dirty, and catastrophic for Earth’s climate.”

Private equity funds appear to be propping up some companies.

And of course the veteran author and researcher Richard Heinberg published an article in July 2022 which summarises a lot of what I have been talking about.

Even better is the Feb 2020 article describing the results of geologist Simon Michaux’s 500 page study of the oil industry for the Finnish government. In it the author says 81% of existing world’s liquid production is in decline and concludes that “oil production may peak sometime in the next few years”.

And it did.  Michaux is interviewed by Nate Hagens in May 2022 and says clearly that oil peaked in November 2018. Here is the chart from the International Energy Agency.

Climate change or peak oil?

So to answer my question, which do we worry about most – climate change or peak oil? My answer is both.

The only problem is that once it is no longer economic to extract oil or natural gas, we have to leave the rest in the ground. It is unrecoverable.

With the Ukraine war, massive climate events and skyrocketing energy prices, we are now witnessing the political and social turmoil that results when we reach the limits of our extractable fossil fuels and the climate results of burning it. The energy descent has been predicted to be steep. The adjustments we must make are of a magnitude few can envisage. The challenge of the energy downshift is colossal.

And, as William Rees said at the end of one of his speeches: So there! You’ve got a job ahead of you. Buck up, it’s a great life!