Peak Oil: Let Me Paint You A Picture

Many readers of this site will fall into one of the following categories regarding the phenomena of Peak Oil.

1. I know about in a general way but my understanding is not full enough to really describe it.


2. I've heard of it and know it is a Bad Thing but not specifically why.


3. I've heard of it and quite frankly I'm not conviced.

For those of you in the first two categories I present via the European Tribune what I believe to be the bestest primer on peak oil yet produced. Best of all, it is loaded with graphs for the benefit of right-brained folks such as myself. If you are a peak oil sceptic you should still take a look and consider that the source is The Atlantic Council, which is a very staid, nonpartisan think tank full of economists and business people and such and very much not one of those D.C. intellectual knocking shops. That such a staid institution should name it's first ever report on peak oil, The Inevitable Peaking of World Oil Production(PDF file) tells you that real serious people are starting to take this stuff real seriously.

Click on graphic for full-sized version.
This graph is very simple: until 1985, we found more oil than we burnt. Since then, we are using up more than we are finding (including through enhanced recovery of existing fields), and are thus reducing our net remaining reserves every year.

The one below shows which sectors of the economy use oil. As you can see, although the industrial and power generation (beige and purple) sectors reduced their demand after the early 1980's -- mostly through switching to natural gas -- the transportation sector (light blue) picked right back up where it left off before the Oil Crisis and has built itself back up to those pre-Oil Crisis levels.

Adding to the chicken-little effect of all this is yesterday's Gray Lady pointing to a government intelligence report that confirms what all of us peak oil "conspiracy nuts" have been saying for years; the Saudi's are full of shit when they say they can boost production beyond 12m/pbd.

WASHINGTON, Oct. 26 - Last spring, the White House publicly embraced plans by Saudi Arabia to increase its oil production capacity significantly. But privately, some officials and others advising the government are skeptical about some of those Saudi forecasts.

...

But doubts about Saudi Arabia's assurances of how much it can expand capacity - and for how long - have been raised in a secret intelligence report and in a separate analysis by a leading government oil adviser, according to a federal government official and the oil expert.

If those skeptical assessments are correct, the administration's hopes of increasing supplies would become still more difficult to fulfill. Washington's expectations about oil production from Iraq and the United Arab Emirates have proved overly optimistic, and the White House has failed to heed advice about both those countries from industry and government specialists, according to documents and interviews.

With that, I leave today with a bit of advice to all my very good friends who drive vehicles that are old/large/gas hogs. $3.00/gallon gas is just the start. Whatever you spend on a new fuel efficient and/or hybrid vehicle in the next 12 months will be recouped well inside the period of the auto loan. For those of you with serious car fetishes and/or real or perceived needs for an SUV, I leave you with: the Lexus RX Hybrid, 27mpg city/31mpg highway, and the more modestly priced Mercury Mariner Hybrid, 33mpg city/29mpg highway.

Trust me. Dump the Suburban/Tahoe/Explorer/etc. NOW while you can still get something reasonable for the trade-in. In two years you won't be able to give those things away. I see a near future where there are millions of those things just sitting abandoned by the sides of the road.