Peak oil production is at a crisis point but also is an opportunity to better the planet, Bloomington City Councilman David Rollo said in a talk, "Evidence and Consequences of Peak Oil," sponsored by Green Drinks at the Upland Brewery banquet hall on March 28.
Rollo is well-qualified to speak on the subject. A Bloomington City Council member, he has sought to bring sustainability policies to local government in his nine years in office. His policy initiatives include creation of the Bloomington Commission on Sustainability in 2005, a green building ordinance in '09 and the Platinum Bicycle Task Force in '11, which was created by a council resolution co-sponsored by Isabel Piedmont-Smith, Andy Ruff and Rollo.
Rollo was the author of the council resolution supporting the Kyoto Protocol and reduction in the community's greenhouse gas emissions in '05 and of a council resolution recognizing world peak oil production in '06. Bloomington was the fourth U.S. city to do so. He is also responsible for creation of the Bloomington Peak Oil Task Force by resolution in '07 to study the problem and recommend mitigation and adaptation strategies. The task force produced the report Redefining Prosperity: Energy Descent and Community Resilience, which the city council adopted as an advisory document in '09. It has been used as a model policy action plan by other cities and by the German military.
Rollo recently left a 30-year career in biology research at IU to become a full-time farmer at Stranger's Hill Organics.
Rollo began by defining peak oil as the peak in petroleum production that is followed by a plateau for several years and then a decline in production.
"Reaching peak oil doesn't mean running out of oil; it means running short of the resource. It also means using low-quality and hard-to-obtain oil. Demand exceeds supply, as we're seeing today, and drives up oil prices."
That peak oil pattern holds for all natural resources, including fossil fuels such as coal and natural gas, he said. Once a resource is discoverrd and brought on line, it comes easily at first, reaches a peak, and production then goes into a decline as the resource becomes more rare.
Reaching peak oil doesn't mean running out of oil; it means running short of the resource. It also means using low-quality and hard-to-obtain oil. Demand exceeds supply, as we're seeing today, and drives up oil prices.
That profile, for all regions, is in a bell-shaped curve of production vs. time, called Hubbert's curve after M. King Hubbert, who first described it in 1956. Generally at the point of production, ultimately recoverable reserves of oil are under the curve. When you reach the point of peak production, Rollo said, about half the oil remains.
We've had a series of warnings about peak oil, originating with Hubbert, who worked for the U.S. Geological Service and Shell Oil Co., Rollo said. He sought to establish mathematically a prediction of the time of peak oil for entire regions.
In the 1950s Hubbert predicted that peak oil production would occur in the 48 contiguous United States in 1970. Looking back now we can "affirm that he was correct; in fact, the lower 48 reached the peak exactly when Hubbert predicted," Rollo said.
Hubbert suffered ridicule because no one would believe his prediction; oil was cheap and plentiful at the time, according to Rollo. In fact, production doubled every 16 years. Shell administrators balked at the prediction.
"The last thing they wanted to tell shareholders was that after reaching terminal production, a decline would ensue, as it has," he said. "We'll never return to the peak in 1970. Peak production and the ensuing decline are inevitable. That's not a theory or myth, as the corporate press likes to claim: it's proven, demonstrable; we see it happening around the world."
A "seminal" paper in 1998 woke Rollo up to peak oil, he said. The article, by petroleum geologists Colin Campbell and Jean Laherrare, was published in Scientific American and used a method for analyzing global oil production similar to the one Hubbert had applied in the 1950s.
"In the 1950s Hubbert predicted that peak oil production would occur in the contiguous United States in 1970. Looking back now we can affirm that he was correct; in fact, the lower 48 reached the peak exactly when Hubbert predicted."
Norway and Mexico are large oil producers and have had their largest declines since 2005. The United States, Rollo observed, depends upon imports of Mexican oil, and Mexico depends on oil exports for cash.
The United Kingdom reached peak production around 2000, when a single accident -- a "blowout, a giant explosion of a drilling rig in the North Sea" -- prompted the decline there, was Rollo said.
What we face in the future is "poor-quality, hard-to-get oil" and decreasing production. Attempts at replacement going forward will be hampered by oil fields that are "difficult to get into," tapping into reserves of lower grades, such as tar sands, oil shales and deep-water drilling.
That there's a discrepancy between what's expected and what's available in the way of oil is a new experience because for 150 years "we had oil at our leisure, as much as we required for a growing economy," Rollo said.
Besides shortages, the costs of obtaining oil in terms of money and net energy also must be considered. "How much energy you put in for what you get out," he said. "If you put more energy in than you get out, you should quit."
It is necessary to take into account externalities, the social costs and so forth, as with BP's Gulf of Mexico disaster two years ago.
Charles Hall, the "grandfather of energy return on investment, or energy costs, demonstrated that energy return can be considered a ratio: you contribute one unit of energy and get something in return,'' Rollo said.
If you put in one unit of energy and get 50 back, Rollo said, 98 percent of the energy is available to society; 1:1 means obtaining nothing for your efforts.
A minimum of 1:6 is necessary for society to run as it's accustomed to it, Rollo said. Conventional oil yields about 1:15, meaning that we're obtaining about 93 percent of the energy coming out.
BP drilled about 200 miles off the coast of Louisiana, through the sea and five miles through rock, and that process yielded a ratio of only 3:1.
The oil sands of Alberta, Canada, require "gigantic mining operations, removing rock, then sediment (mostly asphalt), then separating the oil and natural gas with steam," Rollo said. "That procedure is net-energy poor, with a return of only 2.6."
"Attempts at replacement going forward will be hampered by oil fields that are 'difficult to get into,' tapping into reserves of lower grades, such as tar sands, oil shales and deep-water drilling."
The oil sands production is an "energy loser but also does not scale to provide what's needed relative to the decline in conventional oil, yielding about 3 million barrels per day (mbd)," he said. "The world currently uses about 88 mbd."
"How much," Rollo asked, "can we compensate for the decline of oil with substitutes?"
Worst of all is corn ethanol, with a ratio of 1:1.3, a paltry return. That enterprise uses about 49 percent of the corn the United States grows. Using corn for fuel is politically attractive, Rollo said, because it garners the farm vote. Farmers receive a subsidy, but the diversion of corn to fuel instead of livestock feed or agricultural products raises food prices.
Another substitute for conventional oil is the Bakken shale of North Dakota and Montana. By 2017 the United States will produce about 1 mbd of oil, still only a tiny fraction of oil consumption. The nation consumes about 17 mbd.
Likewise, although the U.S. Geological Survey has upgraded the recoverable reserves of the Bakken shale to more than 3 billion barrels, the world uses a billion barrels every 11 days. Bakken shale is not the panacea that some claim in the popular press.
The externalities are telling as well, Rollo said. The process uses tremendous quantities of water, for example, which will be in ever-shorter supply.
"Canada couldn't meet its Kyoto obligations because of the tar sands," he said. "It takes a tremendous amount of energy to obtain energy from tar sands, and it means environmental wreckage, with huge settling pools used to separate the oil from the water used to obtain it."
A recent reminder of the high cost of deepwater offshore drilling was the Macondo well blowout two years ago in the Gulf of Mexico that "almost killed" the area, Rollo said. There are consequences to drilling through five miles of rock.
"We're at the edge of technology in terms of our ability to control an accident like BP's", he said, "and this was by no means the deepest or most dangerous formation."
"Rollo said oil is a 'master resource' that accounts for 40 percent of total energy use. It is used in almost everything we do, and its energy density is 'tremendous' as compared to nearly any other form of available energy."
The social consequences of oil dependency are numerous.
Ninety percent of our transportation relies on oil, not only gasoline for cars but also diesel fuel for trucks and trains and kerosene for planes. Industrial agriculture uses 10 kilocalories in for 1 out. When oil prices spike, food prices "aren't far behind," according to Rollo.
And so, although transportation will be affected by the coming decline in oil, nearly everything else will be, also.
Rollo said oil is a "master resource" that accounts for 40 percent of total energy use. It is used in almost everything we do, and its energy density is "tremendous" as compared to nearly any other form of available energy.
Over time, oil consumption grows 2-3 percent per year; therefore it's an exponential function. Society is facing "massive challenges in the coming years since consumption doubled essentially every 35 years," Rollo said.
China's demand for oil will soon surpass that of the United States. That Asian country's gross domestic product (GDP), for example, is growing at a rate of 7 percent per year. At that rate, Rollo said, China doubles its economic output every 10 years.
Oil demand "tightly correlates" with world GDP, Rollo said, as one would expect since economic growth demands proportionate energy and materials throughput.
So what happens when economic growth hits a limit of oil production, he inquired. Will the decline in energy constrain economic growth?
Many proponents of peak oil believe that this change will mean the end of economic growth. Indeed, a decline in oil will spell a corresponding economic contraction that we have just begun since global peak oil seems to have arrived several years ago. Despite fierce demand, the world has been on a modestly fluctuating plateau of production for the past six years.
"Despite fierce demand, the world has been on a modestly fluctuating plateau of production for the past six years."
Other evidence points to the reality of peak oil. For instance, a 2009 International Energy Agency study revealed the world's 400 largest oil fields are declining by 6-9 percent per year. To make up the difference -- to offset these declines -- means that we have to bring on a new Saudi Arabia's worth of production every two years, Rollo said.
Likewise, 54 of the 65 most important oil-producing countries are past peak oil; the remaining 11 are left "to carry the burden," Rollo said. This leaves the Organization of the Oil-Exporting Countries (OPEC) plus Russia to fill the gap. Although OPEC claims that it can boost production, there are indications it's having trouble. Furthermore, the reserves that OPEC claims to have are very probably exaggerated for political reasons. What is certain is that OPEC's reserves are unaudited, as are 90 percent of the world's resources controlled by exporting countries, "so we can only take their word for it that they have enough oil," Rollo said.
Even as the plateau is now evident, global demand is increasing, Rollo said. China's and India's economies are growing as oil exports fail to keep pace with demand. To complicate the picture, oil-exporting countries are using more of their own oil as their economies expand, and the exporters find themselves "awash in capital because they're selling oil at a premium. They're consuming more and more of their own oil, so they have less to export."
Reaching the limits of oil production and failing to prepare for the decline are symptomatic of a society that has failed to reconcile itself with biophysical limits, he said.
"Peak oil is a very serious challenge related to the fact that we're on an exponential course of growth on a finite planet," Rollo said. If we don't recognize and act on that fact, we're merely "rearranging the deck chairs on the Titanic."
GDP is not the only phenomenon growing exponentially. So is population, as is CO2 concentration, the exploitation of ocean fisheries, species extinction and loss of tropical rainforest.
Key strategies exist for dealing with this reality. We have to transition to a "steady-state" (no growth) economy, Rollo said, and limit our use of materials and energy within the "regenerative limits of the planet."
"A 2009 International Energy Agency study revealed the world's 400 largest oil fields are declining by 6-9 percent per year."
The present course will spell disaster. We're overshooting carrying capacity. Already we're experiencing the first signs of trouble, and our financial system is faltering as we try to restart growth, only to reach the oil-production ceiling that raises prices, which in turn plunges us back into economic contraction, Rollo said. He also said it's only a matter of time before we wake up to these facts and recognize that the substitutes we're counting on to save the day will not live up to expectations.
"Growth will be increasingly uneconomic -- the costs will exceed the benefits," he said. "The sooner we wake up to this, the better off we will be."
On the optimistic side, Rollo said, "When globalization ends, which is inevitable because it's so energy dependent, we have the opportunity to re-localize our economies. We can do things locally for ourselves: power down, conserve as much as we can, lower our consumption. Likewise, we need to build resilience into everything we do. Ironically, the high-energy society we have created is incredibly fragile."
Rollo said his concern on the City Council is to try to build resilience in water production, public safety, food production -- "things that are absolutely essential to people's well-being." That he sees as his "obligation to the community."
Rollo continued, "We have to enhance social capital, even as monetary capital declines. We have connections that can compensate. One consequence of our oil binge was for people to become increasingly isolated -- we are so atomized in this society."
In the near term, Rollo said, "We need to demand transparency of our public officials because they're not being honest about the limits of oil production and other resources. Many are not aware," he said, "but those who are (and at high levels they surely are) have avoided telling people the truth."
"Likewise, 54 of the 65 most important oil-producing countries are past peak oil; the remaining 11 are left 'to carry the burden.'""
"As we proceed," Rollo concluded, "we're going to have difficulties ahead, no doubt, and our economy is already challenged. There are huge numbers of unemployed, the Federal Reserve is buying treasury bonds, printing money in order to maintain the facade that things are fine and growth will continue. It can't continue, and so we have to accept that." We need an honest reckoning, he said, so we can get to work on the transition.
Instead, it seems, the powers that strive to keep business as usual going, and that entails wars and geopolitical posturing to capture and control the flow of oil. Part of the strategy entails creating scapegoats for the crisis -- immigrants, Saudis, Arabs -- there's a "blame game" going on. It's very important that we as a society avoid a recapitulation of what happened in Germany in the 1930s, Rollo warned. When people are vulnerable and feel victimized, they can be manipulated in "horrifying and appalling ways."
Instead, we need to face the world of limits and the inevitable transition to them "with a narrative that's based on justice and equity -- including inter-generational equity, that provides hope, and I think there's a lot of hope. As part of our strategy, we need to protect our democratic institutions, too, and fight demagoguery."
Linda Greene can be reached at .