Beyond Petroleum

Michael Klare, whose work I find consistently puzzling, has a piece out in The Nation called "Beyond the Age of Petroleum" warning in dire terms of "a fundamental, near epochal shift in US and indeed world history: we are nearing the end of the Petroleum Age and have entered the Age of Insufficiency." Like Joseph Romm arguing with James Kunstler, I don't really get this. Hybrid cars are already available on the market, are much more fuel efficient than conventional autos, and with the "hybrid premium" standing at a few thousand dollars and falling, it seems obvious that if drastically higher fuel prices emerge, middle class suburbanites are going to respond with slightly altered consumption habits (more expensive cars, fewer plasma TVs and granite countertops) rather than radical lifestyle alterations:

Suppose oil hits $160 a barrel and gasoline goes to $5 dollars a gallon in, say, 2015. That price would still be lower than many Europeans pay today. You could just go out and buy the best hybrid and cut your fuel bill in half, back to current levels. Hardly the end of suburbia.

And suppose oil hit $280 a barrel and gasoline rose to $8 dollars a gallon in 2025. You would replace your hybrid with a plug-in hybrid, and those trips less than 30 miles that have made suburbia what it is today would actually cut your fuel bill by a factor of more than 10 -- even if all the electricity were from zero-carbon sources like wind power -- to far below what you are paying today. The extra cost of the vehicle would be paid for in fuel savings in well under five years.

Obviously, this would result in some economic hardship for many families, but it's hardly an "epochal shift." Indeed, even current gasoline prices are actually quite low as a share of household income by historical standards so even if plug-in technology doesn't materialize (which is hard to believe) we're not on the precipice of such never-before-seen apocalypse.

Comments

To be fair, the Kunstler-style catastrophizing over high oil prices reflects the dependence of almost everything on the price of oil--food prices, for example, will be higher because of the increased cost of both oil-based fertilizers and transport costs. So to isolate the cost of gas for the family car and say "well, that's manageable" is to miss the point (whether valid or not) entirely.

Posted by James Gary | October 30, 2007 10:40 AM

"Obviously, this would result in some economic hardship for many families, but it's hardly an "epochal shift."

You need to read up a lot more on the role of hydrocarbons in the economy and the problems of the post-hydrocarbon transition.

Peak oil is going to result in some combination of increased coal usage (with the obvious climate implications) and/or significantly more expensive energy.

If you think cars are going to be powered by wind and hydrogen fuel in 15 years, you've got a big surprise coming.

The ripple effects of declining oil production are going to be felt in a thousand different ways, with more expensive food for the six billion souls on the planet at the top of the list.

Posted by Petey | October 30, 2007 10:45 AM

What Petey said. I really wish Yglesias would just stay away from energy policy and environmental policy in general, since it's obvious he doesn't actually read up on these issues, and just follows his apathetic/contrarian gut.

Posted by Christmas | October 30, 2007 10:53 AM

I'm thinking that you haven't given enough thought to how long it would take to replace trillions of dollars of fossil fuel infrastructure with electricity-based, and how unlikely it is to happen when the economy is contracting.

Posted by Tim | October 30, 2007 10:55 AM

That thing about oil-based fertilizer, by the way, Matt, is one of the many reasons why organic farming practices are so important. But since you embrace a stubborn, willful ignorance about anything to do with the environment, you "could take or leave the 'organic' food concept, which feels to me like a scam".

Posted by Christmas | October 30, 2007 10:59 AM

I don't think you have thought this through. Look at The Oil Drum for more information. And the work of James Hamilton at Econbrowser.

When oil production peaks, which it may already have, and then declines, economic growth will stagnate. That is exactly the time when people cannot afford to purchase all those fancy hybrid cars. Because they can't even manage to make the house payments. True, some will buy hybrids. But there is a huge investment in transportation right now and that won't change overnight. So instead of everyone driving hybrids after oil hits $200, we'll have a deep recession.

The difference between this recession and past ones: oil is not going to get significantly cheaper. Because everyone knows that production is declinining, the alternatives are not as energy rich as oil. Energy prices will stay high.

What this spells is long-term economic stagnation. Our modern amped up economies don't handle long-term stagnation too well. Those at the bottom of the socio-economic ladder are going to suffer. And this will strain our political systems. We have no idea what happens if economies go into long-term decline. Fascism is one outcome.

Also remember that all those plug in electric cars have to get their electricity from somewhere? Coal? Natural gas? Nuclear? They won't get it from wind. Or any other green source. Not enough energy.

The human race, particularly 6 billion of us, have never dealt with decreasing energy supplies.

It is a big deal.

Posted by General Specific | October 30, 2007 10:59 AM

"I really wish Yglesias would just stay away from energy policy and environmental policy in general, since it's obvious he doesn't actually read up on these issues, and just follows his apathetic/contrarian gut."

It baffles me a bit that everyone hasn't been reading up more on these issues.

The coming hydrocarbon crunch seems like the single most important policy question of the next generation by a fairly large margin. It's going to make things like SS, Medicare, and even war and peace secondary issues to energy policy.

Al Gore has raised consciousness of at least part of the whole puzzle, but it's only a part. The fact that King Hubbert still isn't a household name is mystifying to me.

Posted by Petey | October 30, 2007 11:06 AM

The coming hydrocarbon crunch seems like the single most important policy question of the next generation by a fairly large margin.

Nonsense. Once we get abortion outlawed, Jesus will reward us with massive new oil reserves. Just you wait.

Posted by James Gary | October 30, 2007 11:12 AM

But it's not all going to happen at once, is it? It's not as though, one morning, all the oil wells in the world are going to make that "reached the bottom of the milkshake" noise. Supplies are going to dwindle gradually, and prices will rise gradually. The private vehicle fleet turns over with a halflife of three years. Commercial vehicles, eight years. Industrial/agricultural, more like 12. A lot of this stuff can be done in the normal cycle of vehicles wearing out and being replaced. The problem comes with things like industrial plant and power generation, which has a much longer lifetime.

Posted by ajay | October 30, 2007 11:13 AM

Peak oil (to the extent it will even happen) will not negatively impact our lives. Suburbia and carw will still exist. It may not be oil that powers our world, but whatever it is, it will be cheaper.
Food and energy will keep getting cheaper, as will energy.

Commodity prices always fall in the long run.

Posted by Ikram | October 30, 2007 11:16 AM

Stupidest blog post I've read in a while.

Posted by owenz | October 30, 2007 11:16 AM

1) My understanding is that much of the fertilizer is made from natural gas.

2) One new source for natural gas would be hydrate deposits on the ocean floor.

3) But to exploit this --to develop necessary technology in TIME -- we need to change the malign price structure which is currently smothering the free market response.

I.e., that the market price of petroleum is set at $3/gallon at the pump -- whereas the REAL price is closer to $38-$40 /gallon once government subsidies to Big Oil (Huge military budgets to control the Middle East) are taken into account.

Posted by Don Williams | October 30, 2007 11:19 AM

Here's Julian Simon (of the famed Simon-ehrlich wagre)

More people, and increased income, cause resources to become more scarce in the short run. Heightened scarcity causes prices to rise. The higher prices present opportunity, and prompt inventors and entrepreneurs to search for solutions. Many fail in the search, at cost to themselves. But in a free society, solutions are eventually found. And in the long run the new developments leave us better off than if the problems had not arisen. That is, prices eventually become lower than before the increased scarcity occurred."

If Matt's still looking for some topic where he can be a contrarian lefty (now that he no longer blogs about his hatred of trees, and now that being anti-gun-control is no longer contrarian for a lefty)), the Peak-Oil-Panic is a good topic.

Posted by Ikram | October 30, 2007 11:19 AM

but Matt, have you any evidence that hybrids will be effective against both an increase in driving miles per person, an increase in cost of gasoline vs inflation, and also as diminishing US supplies vs growing US demand via population growth and global growth in demand? Or in other words, as other have pointed out, you haven't really though about this hard enough. Not to say that Kunstler is correct, because he isn't, but the idea that hybrids will save us seems a bit shallow doesn't it?

Posted by freddiemac | October 30, 2007 11:22 AM

"But it's not all going to happen at once, is it? It's not as though, one morning, all the oil wells in the world are going to make that "reached the bottom of the milkshake" noise. Supplies are going to dwindle gradually, and prices will rise gradually. The private vehicle fleet turns over with a halflife of three years. Commercial vehicles, eight years. Industrial/agricultural, more like 12. A lot of this stuff can be done in the normal cycle of vehicles wearing out and being replaced. The problem comes with things like industrial plant and power generation, which has a much longer lifetime."

It's far worse than you think.

If Peak Oil follows the normal curve, the dropoff will start immediately once the peak is hit. At the same time, oil demand will continue to rise as India and China continue to industrialize.

So over a decade or two, oil demand will rise by 25% at the same time that production is falling by 25%. That means things get very, very expensive.

A lot of oil gets used to make a pound of wheat. Food gets more expensive. A lot of oil gets used to make an iPhone. Everything gets more expensive.

And when you replace the vehicle fleet over a decade, what do you replace them with? You make them more efficient, but there's no good replacement for oil in the short term.

The problem is going to be far more widespread than just the problem of the suburbs.

Posted by Petey | October 30, 2007 11:25 AM

Re Ikram's comment:
"Here's Julian Simon (of the famed Simon-ehrlich wagre) More people, and increased income, cause resources to become more scarce in the short run. blah blah blah ...And in the long run the new developments leave us better off than if the problems had not arisen."
-------------
I suppose that's why mankind has lived in such safety , security, and luxury for most of human history. And why all of mankind does so today.
Why no more than ..what ?.. 10 maybe 20 people suffer want in Africa today.

Gee, I wonder where those ruins in northern New Mexico came from?

Posted by Don Williams | October 30, 2007 11:26 AM

"One new source for natural gas would be hydrate deposits on the ocean floor."

Those hydrate deposits, of course, are not natural gas. They are methane.

And, of course, methane is a far more potent greenhouse gas than carbon dioxide.

This points up one of the biggest problems of Peak Oil - the most obvious short-term replacements are going to be coal and methane, which will create a drastically worse global warming problem than petroleum was creating.

Posted by Petey | October 30, 2007 11:29 AM

Don Williams wrote:

Gee, I wonder where those ruins in northern New Mexico came from?

Hmm. Jared Diamond's Collapse seems to have influenced the latest round of Chicken Little's. Instead of Overpopulation dooming us all, it's now resource scaricty.

Guys, the prive system works. Imagine an 1840 screed -- The Coming "Peak-Whale". Whale Oil consumption is increasing exponentially, but whale reserves are limited. New England is doomed! Once Whale supplies run out, we will live in darkness forever!

We'll survive Peak-Oil as well as we survived Peak-Whale. The Price system works.

Posted by Ikram | October 30, 2007 11:32 AM

When they have plug-in hybrid semi trucks to lug tomatoes on I-5, then I'll believe that oil at $8 a gallon is no big deal. Oil prices are build into every commodity, food especially. Yeah, maybe with expensive hybrid cars, the suburban middle class can cope with high oil prices. But add to that what I would expect to be significantly higher energy costs for all those home computers and iPods, and higher prices for food - especially anything fresh or frozen - and higher prices for air travel on their vacations, and I expect they will have to cinch their belts a rather lot tighter.

Posted by Scott Martens | October 30, 2007 11:35 AM

A lot of oil gets used to make a pound of wheat. Food gets more expensive. A lot of oil gets used to make an iPhone. Everything gets more expensive.

And this is where I start to wonder about the methodology. I imagine that the amount of oil used to make an iPhone--in the plastic parts and the energy required for manufacturing--represents a much smaller fraction of its price than does the pound of wheat (fertilizer cost presumably accounts for much of its sale price)--and therefore iPhones will be correspondingly less affected by increased oil prices than will wheat.

I'm not doubting that Peak Oil has potentially catastrophic effects, but I'd really be interested in seeing more detailed analysis in this direction than the prices-rise-sky-is-falling alarmism I've seen so far.

Posted by James Gary | October 30, 2007 11:35 AM

I hate to pile on, but less than half of the petroluem used in this country ends up as gasoline. To minimize the potential impact of the issue by talking about the availability of hybrid cars is quite breathtaking.

Posted by Ethel-to-Tilly | October 30, 2007 11:37 AM

Petey sez: "Those hydrate deposits, of course, are not natural gas. They are methane."

Wikipedia sez: "Natural gas is a gaseous fossil fuel consisting primarily of methane but including significant quantities [of other potent greenhouse gases and small chain hydrocarbons]."

BTW, Petey, if those hydrates are released and used for fuel, they will be primarily converted to CO2.

Posted by Klug | October 30, 2007 11:37 AM

1) I think nuclear is the way to go. Enormous energy will be required just to DEVELOP the infrastructure to replace our current oil-based infrastructure.

It probably takes as much energy to smelt the metal to make a wind turbine as that wind turbine generates over a large portion of its life cycle.

Posted by Don Williams | October 30, 2007 11:37 AM

"Hybrid cars are already available on the market, are much more fuel efficient than conventional autos"

If by "much more" you mean "at best 5-10mpg better than a gasoline car in the same weight class, unless you live in a state where the temperature ever goes below freezing in which case not at all" then sure.

Posted by Doctor Memory | October 30, 2007 11:38 AM

http://www.harpers.org/archive/2004/08/0080164
Last stop gas:
Cheap oil, the only oil that matters, is just about gone BY Paul Roberts
PUBLISHED August 2004
[tcrp-news] Harper's piece on peak oil
This month's issue of Harper's features an amusing and reasonably fair cover article on the Peak Oil movement. Check it out. Jon ...
lists.ibiblio.org/pipermail/tcrp-news/2006-July/000029.html

Posted by Michael Pugliese | October 30, 2007 11:41 AM

http://www.energybulletin.net/18947.html
Apocalypse always: Is the peak oil movement really just another apocalyptic cult?

Posted by Michael Pugliese | October 30, 2007 11:43 AM

JG - People need wheat more than they need iPhones. People need meat, too, which is raised on petrochemical intensive corn and soy crops, and will also get more expensive. How hard is that?

And when you're talking about prices nearly doubling, as they did for corn recently, that's catastrophic for many developing world households that often depend heavily on one or two staple crops. People in those countries already spend a much higher proportion of their income on food, and the fertilizer cost increases just to date are pushing farmers out of the market in precisely those areas where imports will be hard to afford.

Posted by natasha | October 30, 2007 11:44 AM

"We'll survive Peak-Oil as well as we survived Peak-Whale. The Price system works."

If you mean "survive" in terms of survival as a species, then I agree with you that we'll likely survive.

But that survival may proceed in a very messy and unpleasant manner.

We'd likely have survived an allout US/USSR nuclear exchange too. The Indians survived Columbus. The Easter Islanders survived running out of trees.

-----

"Instead of Overpopulation dooming us all, it's now resource scaricty."

It's not "resource scarcity" in the abstract.

It's scarcity of one very specific resource - cheap energy - which has underpinned human progress over the past three centuries.

Posted by Petey | October 30, 2007 11:47 AM

Re "than does the pound of wheat (fertilizer cost presumably accounts for much of its sale price)--"
-----------
Well, also fuel to run the tractors, to MAKE the tractor, and to transport the wheat to market. Plus fuel to MAKE the railroads and trains.

During WWII, Winston Churchill wanted to bomb the Caspian Sea oil refineries around Baku --to deny Hitler's armored divisions access to Caspian fuel. Stalin vehemently objected --because that air strike would have caused widespread famine in Russia. Caspian fuel was needed to run Russian tractors.

As I recall, Winston indicated he would reluctantly hold off --unless the Nazis reached Baku. Those British bombers waiting in Iran were
probably one reason why the Russians fought so desperately to stop the Germans at Stalingrad.
A little factoid they leave out of our "We wear the White Hats" history books.

Posted by Don Williams | October 30, 2007 11:50 AM

"Petey, if those hydrates are released and used for fuel, they will be primarily converted to CO2."

The problem is that if you were to mine those hydrates with current technology, you'd release immense additional amounts of methane into the atmosphere.

And once Peak Oil comes on, everyone is going to get very impatient to do things like mining those hydrates even if cleaner technology isn't yet available.

It's a similar reason to why Peak Oil is likely to lead to greater CO2 emissions from coal. If living standards stagnate, let alone fall, worrying about the composition of the atmosphere decades hence isn't going to be the top priority.

Posted by Petey | October 30, 2007 11:53 AM

Oil is going up about 35% a year for the last 5 years. While this can't continute forever, this implies a price of $160 a barrel in 2-3 years, not 7-8 years, and price of $280 a barrell in 3-4 years. This is an enormously different scenario.

I think people are completely unprepared for the worst case scenario of peak oil. I expect oil to return to 2-3% of GDP over the next 5 years, like it was until the era of cheap oil in the 80s and 90s. This implies much, much higher oil prices.

Note that within the last year we traded about $55 a barrel. We are $35 higher than that right now.

Posted by mickslam | October 30, 2007 11:54 AM

> When they have plug-in hybrid semi trucks to
> lug tomatoes on I-5, then I'll believe that
> oil at $8 a gallon is no big deal.

Try "Amtrak Northeast corridor". Or for historical reference: "Milwaukee Road electric" or "Pennsylvania Railroad electric".

Cranky

Posted by Cranky Observer | October 30, 2007 11:54 AM

On the whole predictions of impending catastrophe are generally exaggerated and hyperbolic. Its not so much that the prive system works - as if the free enterprise system has worked wondrously on its own over the past century and a half. If capitalism was left to its own devices it would manage exterminate itself with auto-cannibalism. In any event, private enterprise aficionados need not bother themselves with these matters since they dwell in a peculiar fantasy world.

On the other hand, Yglesias gives us the perspective about matters affecting the Thirty percent majority - from the vantage point of the Thirty percent majority. Will rising fuel prices only minimally impact middle class households? Does a concern for the impact on middle class households really reach the majority of Americans? I suspect that Yglesias and others who write from a similar perspective are pretty much convinced that the universe entirely consists of households in the upper third and partly fourth income quintiles. It is a world lived largely in Pottery Barn catalogs and Best Buy Big TV aisles.

The suffering of the rest of society has never been visible to the new liberals and I don't suppose that concerns over rising energy prices will change that.

Posted by Grizzled Gandy | October 30, 2007 11:55 AM

Adjusting to declining stocks of petroleum will be difficult. But it won't be apocalyptic. The problem I have with Kunstler's vision of doom is that he simultaneously rails against the rampant waste of current American lifestyles, and says that civilization will collapse if we're forced to cut back.

He is right that there is a huge amount of waste built into the way we do things right now. But that waste is actually a cushion of sorts. We can survive and thrive using far less energy. The changeover will not be painless or cheap, but we already have developed much of the technology for it (alternative energy, CFL and LED bulbs, plug-in hybrids, mass transit).

And while contracting oil supplies may inhibit economic growth, public investment in green infrastructure could serve as a counterweight.

Posted by Maximus | October 30, 2007 11:58 AM

It's scarcity of one very specific resource - cheap energy - which has underpinned human progress over the past three centuries.

Pretty much all commodities are rising in lockstep with oil. Someone's not chanting "the price system works" hard enough.

For ocean hydrates and clathrates to ever be significant someone's going to have to figure out how to do deep-water mining. Can't see it happening before it gets too expensive to do it.

Posted by Tim | October 30, 2007 12:01 PM

Re:Cheap Energy
Industrialized economies swtiched from water power to coal power to oil power in the last 150 years. Judging by our excellent past record, where the switch involved higher living standards each time, the switch from oil to other power will be easy, and will result in an even higher standard of living for all.

Energy has gotten continously cheaper for 200 years. It's up to the Peak-Oil-Paniceers to explain the fundamental differrnce between the coming energy transition and all the past energy transitions.

Posted by Ikram | October 30, 2007 12:01 PM

Petey,

You're being something of a scare-monger. I've gone over to the oil drum and talked to those guys. Peak Oil is an idea that has a lot of adherents, but there is a lot of disagreement among those guys as to what it really means. In the general form: oil production will peak and then eventually fall off, yes everyone agrees that this is true.

But the idea that you can extrapolate world oil production trends from the production curves of a single field is silly. The big difference is that for world production, as extraction becomes more difficult, prices rise, making that extraction worthwhile. For a single field the price was relatively constant over its lifetime.

Now maybe there's not a whole lot of oil to be had at any cost- but not everyone looks at it that way. We do know that there is more oil to be had at $100/barrel than $30/barrel. Some people expect the peak of the curve to be pretty flat or bumpy.

At the end of the day, lack of preparation for peak oil could lead to economic collapse, but it could also not. And the conclusive evidence does not preclude the more favorable forecasts. (Unless you include Yglesias', which obviously misses the actual role hydrocarbons play in our economy)

Posted by mpowell | October 30, 2007 12:03 PM

"Energy has gotten continously cheaper for 200 years. It's up to the Peak-Oil-Paniceers to explain the fundamental differrnce between the coming energy transition and all the past energy transitions."

Dude, they have. And in rather convincing fashion.

You just haven't processed the material yet.

-----

"Industrialized economies swtiched from water power to coal power to oil power in the last 150 years. Judging by our excellent past record, where the switch involved higher living standards each time, the switch from oil to other power will be easy, and will result in an even higher standard of living for all."

Industrialization didn't happen under water power. It happened with coal power. The industrial era is the hydrocarbon era.

The first industrial engine was built, not coincidentally, to make it easier to extract more coal.

Coal to oil was easy because oil is even cheaper and easier energy than coal.

The short-term is going to be very difficult because:

- there is nothing as easy as oil to move to
- economic and political conditions are likely to deteriorate after peak oil, thus impeding any smooth transition
- increased global warming is likely to be one immediate result

I'm not much of an alarmist about most policy matters, but this thing is a clusterfuck beyond belief. It's going to squeeze from multiple sides at the same time and make rational responses difficult.

Posted by Petey | October 30, 2007 12:12 PM

It probably takes as much energy to smelt the metal to make a wind turbine as that wind turbine generates over a large portion of its life cycle.

Posted by Don Williams | October 30, 2007 11:37 AM

Wrong; the last estimate I saw was about seven months, on a machine with a design life of 20 years.

Posted by Alex | October 30, 2007 12:15 PM

The people who complain about the cost of dealing with AGW are lying. That it. Mitigation of green house gases and development of alternative energies are not that much of a burden. They know that but want to GET THEIRS NOW instead.

Posted by Jeffrey Davis | October 30, 2007 12:16 PM

"Now maybe there's not a whole lot of oil to be had at any cost"

Strawman much?

Of course there's plenty of expensive oil left. Peak oil means half of historical production is still left to be extracted.

"Some people expect the peak of the curve to be pretty flat or bumpy."

If there is a ten year plateau at the top, that'll make things easier of course.

But even plateauing production is going to be a problem. Demand will continue to rise while production plateaus, and thus prices will rise.

-----

I'm not saying the apocalypse is at hand.

What I am saying is that Peak Oil and Global Warming are closely linked problems that herald the end of the era of easy hydrocarbon growth. That the implications of this are poorly understood by most educated folks at the moment. And that's it's going to be the single biggest issue of the next several decades.

Posted by Petey | October 30, 2007 12:20 PM

The Price system works

True, sort of. Of course, if a really hard problem needs solving, it works by inflicting massive discomfort (high costs) on a multitude of people, so that the incentives to find a solution are high enough and the resources devoted are sufficient. Saying that 'the market will find a solution' and 'things are going to be bad for many, many people' are not mutually exclusive claims.
And commodity prices don't always fall in the long run. In general they do, and if you have no other information that's the way to bet, but if you have a finite resource with no possible substitutes the price will not go down over time.

Posted by bbartlog | October 30, 2007 12:22 PM

Ikram is currently auditioning for the part of Dr Pangloss in the coming Broadway production of Candide, which will be remarkable on account of being powered by pure optimism.

Posted by pseudonymous in nc | October 30, 2007 12:22 PM

We forget that the high standard of living that Americans enjoy is predicated upon all that cheap shit the Chinese manufacture for us that is shipped across the Pacific and trucked around the country into Wal-Marts in every community. China now runs on oil. The injection-molded plastic crap that the Chinese make for us is made from oil. Oil powers the massive ships that carry our plastic crap to us and the trucks that deliver it all to Wal-Mart run on gasoline.

I think everyone agrees that the "peak" is more-or-less upon us. We took 100+ years to reach the peak - how many years will it take to deplete the oil that remains unexploited? It could happen quickly.

When you think about the transition period between cheap and plentiful oil and scarce and expensive oil, don't think about Mad Max/Road Warrior - think about England during the Blitz.

Posted by Adam Stanhope | October 30, 2007 12:24 PM

Ah yes. The catastrophists-on-the-left revel in this sort of "Capitalism has doomed us all" nonsense.

Will oil supplies contract? Yes, sort of, but it will take a generation or two for this to happen.

Will prices increase? Yes. And the increase in prices will make new exploration more profitable, alternative sources more viable, and spur the creation of nuclear and other non-oil energy production.

Will society come to a crashing halt? No. Of course not. In about 20 years, no one will talk about oil anymore, because it will only be used in certain, specific applications. Everything will be electric, or hydrogen, or something else that we can't even imagine yet.

What the catastrophists suffer from, as catastrophists are wont to do, is a lack of imagination. They are so caught up in their rigid view of the world that they can't imagine or tolerate any elasticity in the world of tomorrow.

Markets adapt. People adapt. The rising price of gas and oil is already having a salutary effect on new research, new field production, new technologies and new ideas. That's the way the system works in a free market.

The free market is much, much smarter than you or I, and significantly smarter than any government.

Posted by jb | October 30, 2007 12:24 PM

Note that Nitrogen fertilizer (ammonia actually) is made from natural gas using the Haber–Bosch process -- in which hydrogen is extracted from natural gas and then combined with atmospheric nitrogen and oxygen to make ammonia.

Wikipedia describes the process. I believe the excess carbon dioxide in the process is extracted with potassium carbonate -- but it may be ultimately released into the air when bread is baked or people with upset stomachs burp.

If massive amounts of electricity are available , then the hydrogen can also be obtained by electrolysis of water. I seem to recall that the heavy water plant in Norway --bombed by British agents in WWII to deny the Nazis the atomic bomb -- was actually set up to create fertilizer from abundant hydroelectric power. The heavy water was just a byproduct.

Phosphate and potassium are the other two primary fertilizers. Our Phosphate fertilizer is largely obtained by grinding up deposits of phosphate rock. Potassium chloride is obtained from deposits of the salt in Canada and elsewhere.

Engineers find the sight of liberal arts weenies debating technology policy hilarious. Kinda like the scene in Monty Python in which the guy discusses how the coconuts could have arrived in England.

Of course, we could always take certain Pacific islands --with large deposits of guano -- away from Chile. We could call it "The Birdshit War". Now what could be our pretext?

Posted by Don Williams | October 30, 2007 12:29 PM

I go back and forth on this. I hope for my children's sake Matt and Atrios' views are correct. The problem is that in the world of engineering there are such things at tipping points, points of no return, and one-way functions. There is a nonzero possibility that the oil/energy situation is one or more of those.

Cranky

Posted by Cranky Observer | October 30, 2007 12:42 PM

Peak oil as a catastrophic event is a psy-op scam. However, there IS a real threat of a massive kill-off from the global elites-- and they are ultimately the ones who will decide what happens with world energy-- they control it.

Posted by Alexander | October 30, 2007 12:45 PM

how many years will it take to deplete the oil that remains unexploited? It could happen quickly.

A couple of years ago, I read that half of all the CO2 that has been put into the atmosphere has been put there since 1970. That's a good measure of speed of the use of oil. So, yes, the drop-off from Peak Oil will be abrupter than the lead-in.

Posted by Jeffrey Davis | October 30, 2007 12:45 PM

Re Ikram's comment "It's up to the Peak-Oil-Paniceers to explain the fundamental differrnce between the coming energy transition and all the past energy transitions."
---------
1) How about: We have a shitload more people and a shitload less supply of non-renewable resources.

2) Also, 200 years ago, people damm well knew they could starve to death if they didn't get up off their asses. They had a religion but it was not the theology of "market capitalism".

3) Also, the aristocracy of 200 years ago believed they had a duty to their fiefs -- that privilege brought responsibility.

By contrast, Our superrich today already have a foot out the door -- being Ready to move their wealth overseas and abandon their America when their irresponsibility finally brings down disaster. The same way the Roman leadership abandoned Italy.

4) I wonder what will be the New Constantiople. Some argue Australia, but I think it's toast -- only 20 million people with 3 billion Asians just a hop, skip and jump over an island chain.

New Zealand? Argentina?

Some of them are buying up large amounts of Montana -- but that a fool's refuge. While global warming will help the climate up there, it is also melting the mountain snow deposits -- the primary water supply.

Los Angeles is about to get VERY thirsty.

Posted by Don Williams | October 30, 2007 12:49 PM

"So, yes, the drop-off from Peak Oil will be abrupter than the lead-in."

Well, probably not. Here is the standard Hubbert curve.

The drop-off looks just like the lead-in.

In other words, if Peak Oil is 2010, we should be extracting as much oil in 2050 as we did in 1970.

Posted by Petey | October 30, 2007 12:53 PM

I don't think Klare makes a compelling case in this particular article for his claims that we are entering an "age of insufficiency". I suspect he is right that the changes in the way we live that will be prompted by the gradual end of the petroleum era will be epochal - at least more epochal then Matt imagines. But that doesn't tell us much about how the epochal changes will shake out in terms of overall standards of living.

But anyway, I don't think these two claims are central to Klare's arguments in this article. His focus is elsewhere.

The first is this: Driven by economic incentives that shift as petroleum production becomes more expensive and declines, and as petroleum price structures change, we may indeed innovate our way out of the problem. But the innovation may take forms that are dreadfully destructive of the natural world. Consider the harms we have already done through a couple centuries of rapidly rising coal and petroleum use.

We may successfully and speedily move over to other forms of energy, giving ourselves a soft landing - or even spurring growth - in the measurable "economy". But these new forms may turn out to be more polluting and more environmentally destructive to harvest and produce.

Another possibility that Klare mentions is that because many of the new technologies are so destructive to produce and burn, environmental movements around the world may prevent the rapid exploitation of these resources. Then the economic landing will not be nearly so soft, and the competition for control and exploitation of existing resources will be more intense - including the military dimension of this competition. Again, one can hope that these powerful environmental incentives eventually lead to research and innovation in clean powerful technologies. But it is hard to predict the future of technological development.

There really is no guarantee of technological innovation sufficient to satisfy current global levels of human needs and desires. It really is a possibility that the technological liberation of vast untapped stores of work-producing energies is not in the scientific cards, and that we have just lived through a global boom time driven by the one truly powerful and abundant energy resource available to human beings.

Klare's other main concern is resource wars. However one thinks the energy issue will shake out eventually, petroleum will continue to be extraordinarily valuable during the transitional period. It's price will rise. The need to secure supplies will be acute. Additionally, economic control of those supplies will be a huge geopolitical prize for which major national and private players will compete, bringing to bear the military tools that are necessary to win the competition. The competition for power and wealth will be hot. I think we predict at least a few more decades of neo-colonial dispossession, competition for clients, global graft and corruption, influence-peddling, predatory lending and rent-seeking and sporadic regional wars related to petroleum. (Perhaps even worse than sporadic and regional: consider the role of petroleum in the Second World War.) The people who happen to live in these hotly contested areas will likely be the biggest losers, as will be the sons of the competing states who are recruited to fight the wars, unless we do something at the global international level to assist an orderly and managed transition, rather than resign ourselves to a classic "great game" free-for-all.

Finally, Klare alludes to the apparent need for a revolution in efficiency - in the machines we use, in our dwellings, in the manner in which we organize our communities, the ways in which we move ourselves from one part of the world to another, to improve the qualities of our lives with lower overall energy resource inputs, and lower energy outputs.

This is one of those areas where I really don't trust people like Matt. To put it bluntly, I don't trust people who are apparently content to live their whole lives in urban shitholes like NYC and Washington DC to take care of the planet, or to prevent the rest of the world from being turned into one big, perpetually mined and consumed "resource".

Posted by Dan Kervick | October 30, 2007 12:54 PM

In other words, if Peak Oil is 2010, we should be extracting as much oil in 2050 as we did in 1970.

Deffeyes thinks it came two years ago.

http://en.wikipedia.org/wiki/Image:Hubbert_peak_oil_plot.svg

But, yes, I was wrong. The anticipated tail stretches out longer than the run-up (smites forehead) due to the increased cost (puts on cone shaped hat and sits in corner).

Posted by Jeffrey Davis | October 30, 2007 12:58 PM

"The anticipated tail stretches out longer than the run-up (smites forehead) due to the increased cost (puts on cone shaped hat and sits in corner)."

But all this is somewhat besides the point.

There will still be oil to be extracted 100 years from now. The problem is that all the cheap oil is gone. And the implications of the end of cheap oil are very poorly understood.

Posted by Petey | October 30, 2007 1:07 PM

Peak oil as a catastrophic event is a psy-op scam. However, there IS a real threat of a massive kill-off from the global elites-- and they are ultimately the ones who will decide what happens with world energy-- they control it.

Posted by Alexander | October 30, 2007 1:11 PM

Unlike Chris Matthews, I love you new young liberal types... but on the Oil topic there's way too much trust in technology to 'save us' (this is a big Kunstler theme BTW, if you've read The Long Emergency). The fact that Alex Jones has been infecting the left with his "Peak Oil Fake" rhetoric doesn't help matters much.

Every calorie of food consumed in world requires 5-7 calories of petroleum to generate it (fertilizer, farm equipment, and shipping the makings of that salad from the irrigated deserts of CA to your table in NYC or DC).

Sure, if ALL we used oil for was to run our cars, there'd be workarounds... but it's that multipler effect that could kill us. We virtually eat our oil. And use it for medicines. And use it to implicitly back our currency. And all these pillars of modern life get whacked, real hard, and all at once.

It's also difficult to completely retool your civilization in 20 years without a high-value energy source like oil. We may already be over the cliff...

Organic (mid-1800s style) farming can support at most 1 Billion people on the planet, by most estimates.

Even if we come up with some magic technologies to double food productivity without oil (hydroponics? we learn to love kelp and insect protein?), that's only 2 billion people who get to be alive in 2100.

Even if we start retooling in time: Who gets to starve to death, so that we can use the last of the oil to lay down all those new railroad tracks, retrofit all our cities, and build all those solar panels and Priuses?

Posted by BUSTER | October 30, 2007 1:15 PM

What I am saying is that Peak Oil and Global Warming are closely linked problems that herald the end of the era of easy hydrocarbon growth. That the implications of this are poorly understood by most educated folks at the moment. And that's it's going to be the single biggest issue of the next several decades.

Well, I'd agree that this is true in the sense that this is the biggest actually tough problem to deal with. I'm not sure that it will be true politically- people are always getting worked up about things that don't matter. And even those that do, like healthcare and SS, could be addressed in reasonable ways if everyone weren't such idiots. On the other hand, people being idiots and those invested in the way things work impacting the political process are real problems, just in a different sense than the hard facts of energy policy and global warming. But I am still hoping that once we clear the way for responsible nuclear energy that the energy policy will get a whole lot easier, independent of further political reason.

Here's a question: can anyone quote the cost, in dollars per barrel of oil when solar or wind energy would actually be less expensive than oil?

Posted by mpowell | October 30, 2007 1:17 PM

"And the implications of the end of cheap oil are very poorly understood."

Everyone focuses on the war and famine aspects of the end of cheap oil, but I'm surprised that almost no one seems to focus on the global warming aspects.

Peak oil is likely to force increases in the short-term in a variety of energy sources that increase global warming gasses more than petroleum.

Tar sands, coal, and hydrates will all produce significantly more greenhouse gasses than oil does. And they're all likely to get heavily exploited as oil prices rise.

Posted by Petey | October 30, 2007 1:18 PM

Re: I'm thinking that you haven't given enough thought to how long it would take to replace trillions of dollars of fossil fuel infrastructure with electricity-based, and how unlikely it is to happen when the economy is contracting.

The economy will not be contracting if we are spending trillions of dollars to create or modify energy infrasructure. The economy will be growing since whole new industries will be coming into existence. To see how this works we need look no further than the 1990s when computers and the Internet replaced a large numbers of non-computerized and localized functions in the economy. Or if you insist on energy being the subject, look to the late 19th and early 20th century when the current energy infrastrure was created. Yes, that era includes some nasty economic downturns, but overall it was a time of growth and rising living standards.

Re: Those hydrate deposits, of course, are not natural gas. They are methane.

Um, natural gas is largely methane.

Re: Gee, I wonder where those ruins in northern New Mexico came from?

The Anasazi were victims of the late medieval Little Ice Age which caused a drying of the climate in the American Southwest. As far as it known, that climatic downtown was due not to anything humans were doing at the time, but was caused by a variation in solar output.

Re: Demand will continue to rise while production plateaus, and thus prices will rise.

You are assuming the demand is independent of pricing. Demand may well flatten out, especially in countries like India and China, if the price rises too high. Indeed, those countries may well be the ones to develop alternate energy sources as a result.

Re: How about: We have a shitload more people and a shitload less supply of non-renewable resources.

Human population has been straining the limit of available resources for pretty much of all of history so nothing new under the sun there.

Re: The same way the Roman leadership abandoned Italy.

Huh? There was a Western Emperor in Italy until the Goths pensioned the last one off to a villa. After that there was a Bishop of Rome whose office was in some ways as powerful and as munificent as that of an emperor. Also, rather few Romans departed for Constantinople. The people of that city, including the upper classes, were mainly Greeks.

Posted by JonF | October 30, 2007 1:26 PM

JonF,

You're mistaken about the economy's chances for growth with a change in infrastructure. We measure the economy based on output. If there is a change in infrastructure based on the availability of a new technology that is better than the old one, yes, the economy is growing b/c people are moving to a more economical technology. But if that change is being made because an old technology suddenly got a whole lot more expensive, sorry, but the economy's output may very well have dropped. As the infrastructure is developed, it should improve again, but there could be some kind of drop before its in place and even afterwards if the new technology isn't as good as the old, cheap one. Your examples don't apply here.

Some people think that the economy is just about people having jobs. It isn't. It's about what we are capable of producing, as a whole. One of the inputs is the cost of energy.

Posted by mpowell | October 30, 2007 1:44 PM

I think nuclear is the way to go. Enormous energy will be required just to DEVELOP the infrastructure to replace our current oil-based infrastructure.

...and all that nuclear infrastructure will be cheap, huh?

But, even worse, nuclear proponents seem to view it as a sort of zero-point energy generation scheme. It's not. We would spend our nuclear fuel in about 100 years.

Posted by scarshapedstar | October 30, 2007 1:51 PM

Slap some thin-film solar cell strips on the wind turbines. We can harvest all the plastic crap we've dumped into the ocean and turn it into something useful; meanwhile, plastics can be designed to biodegrade: http://www.livescience.com/technology/070327_seawater_plastic.html

Posted by Phoenix Woman | October 30, 2007 2:16 PM

"1) I think nuclear is the way to go."

Nuclear is not carbon free. You'd usually want some steel and concrete to contain the uranium at a bare minimum. And the fuel does not pop out of the ground ready to use, and there's waste security and disposal, and there's the issue of Peak Uranium...

We'd be subsidizing nuclear even more than we'd be subsidizing oil. Fine, let's build nuclear plants, but let's save the subsidies for cleaner energy sources with fewer geopolitical and environmental consequences.

"The free market is much, much smarter than you or I, and significantly smarter than any government."

The free market (which in its "pure" form does not exist when it comes to the energy markets, let alone any other markets) is made up of people. As is clearly demonstrated by some of the comments on this blog topic, large numbers of people are stupid. Having blind faith in the "free market" phenomenon is not so much "wisdom" as it is "religion", which is fine, but not particularly helpful in this discussion.

"But in a free society, solutions are eventually found. And in the long run the new developments leave us better off than if the problems had not arisen. That is, prices eventually become lower than before the increased scarcity occurred."

That has to be the stupidest. Solutions are eventually found? Well, yeah, because otherwise we go extinct which luckily we haven't yet. One could argue that studying AIDS has led to miraculous breakthroughs in anti-viral technology that will allow us all to live longer healthier lives, but it seems kinda silly to ignore the human misery that has preceded those breakthroughs.

You know, Pollyannas can be just as irritating as chicken littles. But, hey, if you want to sing "Forget your troubles, come on get happy!", go right ahead.

Posted by Rihilism | October 30, 2007 2:23 PM

Question on Soy Products:

There are some smart people here, so I have a question.

Why is it that soy products are always more expensive than the meat products they substitute for? Soy burgers, soy chicken nuggets, soy milk etc are way pricier than their meat inspirations.

If it takes ~20 lbs of grain to produce 1 pound of beef, why isn't meat more expensive relative to soy?

Posted by Sam | October 30, 2007 2:31 PM

Peak Oil could be bad. Really bad. The hydrocarbon era is coming to an end. Matt really dissapoints here by acting as if hybrids can solve the problem.

And generally I am a mild liberal. Generally I look at the apocalyptic left as being crazy, and Kunstler definitely goes overboard. But when you look at the facts he presents, as many posters here have done an excellent job of doing, its hard to see what will replace oil. Oil is integrated into every production system we have. We have to redo everything with what?

The range of futures I foresee: the best case scenario would be a gradual decrease in oil supplies that allows us to gradually compensate with efficiency measures, nuclear power, alternative fuels. This would result in a moderate dip in living standards for the middle class.

The worst case scenario is really really bad. All the doubters of Peak Oil need to look into this. Because by objective standards its hard to see how we square this circle. And a faith in technology is nice and all but in the end it really is just faith without facts to back it up. No different than waiting for Jesus to descend from the clouds.

Posted by nathan | October 30, 2007 2:36 PM

Well, suppose gasoline goes to $5 a gallon next year. Diesel was $3.51 at the pump last week- do you really think gas won't hit $5 a gallon in 2008?

As for all those technical improvements, a good car gets about 30 mpg today, just like a good car did in 1958. So there's a solid 50 years with no real improvements at all.

If oil was the steroids, computers are the LSD. We bulked up but now we learn it's not a question of size, but of brains. Who knew.

Matt may want to get up to speed on some of this, or his political commentary may increasingly resemble the reportage of William Shirer.

Posted by serial catowner | October 30, 2007 2:37 PM

"And a faith in technology is nice and all but in the end it really is just faith without facts to back it up."

I actually have a great deal of faith in the ability of technology to solve the problem in the long-term.

But the problem is what happens in the short-term.

If catastrophic damage gets done to the climate as a response to peak oil, or if catastrophic damage gets done to civilization through wars and famines as a result of peak oil, things could get grim.

If things hold together, we'll be fine in 100 years. Technology really is like magic. The problem is holding things together through the shock and retaining our technological ability.

If the carrying capacity of the planet gets slashed, it's not too difficult to imagine that taking place in a very destructive manner.

Posted by Petey | October 30, 2007 2:45 PM

"Well, suppose gasoline goes to $5 a gallon next year"

Suppose gasoline goes to $15 a gallon in fifteen years...

Posted by Petey | October 30, 2007 2:50 PM

Re scarshapedstar's comment " We would spend our nuclear fuel in about 100 years"
-------------
Would that be so if we built Breeder reactors -- that can be run with only small monthly inputs of abundant U238 or thorium ? See http://en.wikipedia.org/wiki/Breeder_reactor

And to those who argue about problems with nuclear, I would ask: Why aren't we solving those problems?

E.g. by spending a small part of the hundreds of billions we spend on defense every year on nuclear research instead??

Posted by Don Williams | October 30, 2007 2:50 PM

Re: Gee, I wonder where those ruins in northern New Mexico came from?

The Anasazi were victims of the late medieval Little Ice Age which caused a drying of the climate in the American Southwest. As far as it known, that climatic downtown was due not to anything humans were doing at the time, but was caused by a variation in solar output.

=================================================

There's controversy about the beginning of the Little Ice Age, but most put its beginning later in the 14th century, quite a while after the Ancestral Pueblo (Anasazi) abandoned the Northern Southwest around AD 1300.

http://en.wikipedia.org/wiki/Little_Ice_Age

Most Ancestral Pueblo development actually took place during the Medieval Climatic Maximum that was actually a very warm and dry period in western North America AD 800 - 1300.

For many years most archaeologists believed that a long drought at the end of the 13th century had driven the Indians out of the area. However there were worse droughts in the late 12th century and populations moved out of the worst-hit areas and returned when conditions were better.

Currently theory is that the 13th century drought, different from the earlier ones, set off a cycle of internecine warfare. People moved into cliff dwellings and agglomerated into large settlements for defensive purposes. Warrior motifs appear in rock art and evidence of cannibalism increases - probably not due to starvation but as a warfare ritual. Conditions were finally so bad that entire pueblos packed up and moved south. Northern Anasazi ceramic styles and building patterns start appearing alongside local populations in southern Arizona and New Mexico. Societal collapse was so complete that the area wasn't recolonized as it was in the late 1100s.

Posted by Campesino | October 30, 2007 2:55 PM

I respectfully submit to Mr. Yglesias that if he wishes to move beyond being "puzzled" on this issue, there are numerous excellent resources on the web that he can use to educate himself. Robert Rapier's primer on Peak Oil is written by an oil industry expert, heavy on facts and light on attitude.

Posted by Medium Dave | October 30, 2007 3:02 PM

As for all those technical improvements, a good car gets about 30 mpg today, just like a good car did in 1958. So there's a solid 50 years with no real improvements at all.

If oil was the steroids, computers are the LSD. We bulked up but now we learn it's not a question of size, but of brains. Who knew.

Matt may want to get up to speed on some of this, or his political commentary may increasingly resemble the reportage of William Shirer.

Posted by serial catowner | October 30, 2007 2:37 PM

=================================================

Actually, no. The Corporate Average Fuel Economy mpg (actual not the goal) in the US has increased from about 19 mpg in 1975 to 30 mpg now.
http://en.wikipedia.org/wiki/Corporate_Average_Fuel_Economy

Posted by Campesino | October 30, 2007 3:12 PM

Skip the thoughts about what price oil will be. Right now, the world is producing 85 million barrels a day, and falling. Only about 40 milliion is in the export market, and the US uses a third of that. If production declines at 4% per year, then in three years there is only 30 mmbbl available in the export market. With our declining dollar, are we going to be able to appropriate half of all exports? Or do we drop to just one-quarter or one-fifth? If it is the latter, what oil price is required to DESTROY 8 million barrels a day of consumption, or about 40% of all US consumption? How does that happen peacefully? Answer: it doesn't. What price is required to destroy 40% of all US consumption? I think that it is much higher than $15/gallon.

Posted by olepossom | October 30, 2007 3:15 PM

I think I agree with serial cat owner.

Oil-based products are going up a lot faster than $5 in 8 years or $8 in 18 years. I would reasonably expect to see petrol being $30 a US gallon in 8 years, and then in 2025 it would be a triple-digit figure. This is one downside.

Of course, by then Mercedes 'smart-cars' (greater than 60 mpg today) will be considered inefficient and lacking the technological improvements that will be standard on cars in almost all nations (but built in China or Africa) - so we could probably expect around 200 mpg in 8 years. An upside for those middle-class Westerners who can afford it.

The issue will boil down to 'the poor'. Which will be entire nation-states (eg. Indonesia, Philippines, Africa, others) and also the 'minimum wage' folks in Westernised countries, who won't be able to afford high-tech cars or scooters. They will push-bike to work, perhaps?

Obviously food will get more expensive...tractors won't be nearly as easily upgraded nor will B-doubles (truck+2 trailers). Of course we can run these on bio-diesel, at a higher cost per gallon than cheap oil, however land devoted to producing transport fuels is land not producing food.

I suspect that over the period to 2025 that Matthew originally raised, the growth of Westernised economies will be problematic; well-off will move to new technologies; middle-class will start making sacrifices; and the poor are in for a very bad time.

Ross.

Posted by Rossop | October 30, 2007 3:44 PM

"Oil-based products are going up a lot faster than $5 in 8 years or $8 in 18 years. I would reasonably expect to see petrol being $30 a US gallon in 8 years, and then in 2025 it would be a triple-digit figure."

I don't think oil will be anywhere near $100+ a gallon in 2025.

When oil gets considerably less expensive than that, it gets cost effective to convert more plentiful but more difficult hydrocarbons to oil usage.

If oil costs $15 a gallon, we'll be mining and refining tar sands, mining sea floor hydrates, and converting coal to gas.

The problem is all three of those things will end up producing significantly more greenhouse gasses than petroleum does.

-----

If global warming didn't exist, I'd feel less worried about the situation.

My guess is that the response to peak oil will be to emit far more greenhouse gasses than calculated by even the most pessimistic IPCC forecasts.

If there is economic stagnation or decline as a result of scarce energy, the political impulse to produce energy no matter what the greenhouse gas consequences seems like it will be compelling.

Posted by Petey | October 30, 2007 4:07 PM

"Why is it that soy products are always more expensive than the meat products they substitute for? Soy burgers, soy chicken nuggets, soy milk etc are way pricier than their meat inspirations...If it takes ~20 lbs of grain to produce 1 pound of beef, why isn't meat more expensive relative to soy?"

Not that I know the reason for certain, but my guess would be a combination of livestock subsidies, actual manufacturing costs, and a demand that is not at an "economy of scale" like beef, chicken, pork. There's probably some "upscale" marketing to get higher profits also. Just a guess.

Posted by Rihilism | October 30, 2007 4:58 PM