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Chapter1: End Of An Energy Era (and for the optimists: Dawn Of A New Energy Era!) -Trend: Non Renewable, Inefficient > Renewable, Efficient. Q. How much oil do we use each year? A. In 2006 we produced and consumed 26.86 billion barrels of oil -but numbers become meaningless at these scales -in pictures that’s just over a cubic mile of oil: -The small triangular object in the lower right corner is the Eiffel Tower... More than anything else that will define the decade of 2010 to 2020 will be our relationship to the energy that sustains us as a civilisation. Of course energy can come from a number of sources but it is currently dominated by the fossil fuels: oil, gas and coal. From the starting point of Global Warming to the shocking realisation that the supply of these precious natural resources are in terminal production decline, energy related issues will become “the new black” for dinner party gossip as the decade progresses. The intensifying debate around ‘Global Warming’ is a blessing in disguise: whatever your feelings on it’s truth or falsity it has put our usage of these non-renewable, atmospheric polluting substances firmly on the political agenda. However there is a much more sinister aspect to our usage that most of the worlds advanced populations have yet to grasp: namely that we are currently living on borrowed time and before 2020 it will become apparent that the civilisation we have created around cheaply extracted and readily available fossil fuels is about to change dramatically. Let’s take a case in point: The UK. As of 2005 the UK produced 70% of the EU25 (25 top Euro countries) supply of crude oil and 44% of its supply of gas. In short due to exploiting its North Sea resources, by the late Nineties the UK had become the ‘Saudi Arabia’ of Europe. However, since 1999 UK oil production from the North Sea has been in terminal decline and could be negligible in terms of UK demand by 2020 -certainly by the early part of the coming decade a small but rapidly growing import/export gap will be visible in the figures. The following diagram shows UK Oil production since 1970 –blue diamonds indicate actual production in thousands of barrels per day (kbpd) to 2006. The green line is a ‘loglet’ production approximation based on summing the two curves we see in the underlying data:
Loglet Analysis of UK Oil Production –analysis courtesy of Khebab@theoildrum [Note: The graph above was produced at the end of 2006 and will be updated at the end of 2009 -it will be interesting to see how closely the models prediction matches actuality...] Even the DTIs own -some would say rather optimistic- forecasts shows a net importation commencing before the start of the coming decade: As production falls and a growing gap appears in the UK budget the temptation to keep selling oil for income on the open market will be high –however since internal demand will eventually be greater than supply this country will have no choice but to keep more and more of it’s own oil and gas resources to itself in order to avoid a supply crunch at home. A major net oil exporter will have become a net oil importer. Britain as well as the other EU25 importers will thus have to increasingly look elsewhere to top-up their Energy supply and they are currently increasingly looking East for an answer: Russian Gas. Russia is becoming a huge new energy exporter to Europe and this trend will continue well into the decade and beyond. The issue of energy security will loom large as the UK and Europe come to rely more and more on their old cold war adversary. The resurgence of the Russian economy coupled with the rise of the NICs (Newly Industrialised Countries -especially China) is placing a huge new supply demand on the global energy market. In fact as of 2006 we already see China scrambling to secure energy resources -along with just about any other raw materials it can get its hands on. The room is brightest when all the available candle wicks have been lit and the candles are burning together. At some point the threshold crossed by the US in 1971 and the UK pre-2010 –i.e. that their production has peaked and they have become net importers of oil- will spread to other oil producing nations across the globe. Producers will steadily become net importers and the price of what is left to pump onto the open market will inevitably rise. All remaining net producer countries will be under enormous pressure to increase supply to the open market but given their rising internal demand and the inherent geophysical limits on supply this will be constrained. A counter trend will form: one of energy conservation forced by economic circumstance –the market economy at work. The impact of a supply crunch in the face of massive demand will cause a huge energy price spike followed by a widespread global economic depression, it is likely that governments will take the inflationary route rather than risk a deflationary collapse as occurred in the 1930s, indeed as of 2007 we are already seeing this occurring in the ever increasing money supply and Agflation effects (Agricultural Inflation -i.e. Corn prices). Interest and massive investment in efficiency, renewables and all energy alternatives will flourish. It’s likely that America -with one of the highest sensitivities to oil and it’s love of all solutions technological- will declare a new ‘Manhattan’ or ‘Apollo’ scale crash project of some type to try and avert an even greater crisis. It is noteworthy that the US has now rejoined the International Fusion Research Project after years of absence. America is particularly sensitive to price increases in oil due to it’s staggering reliance on the automobile as the primary means of transportation due to its relatively low density urban environment and lower use of mass transit systems. The average American uses an energy equivalent of approximately 11,000 Watts of energy per person 24/7/365 versus a European average of around 5,000 Watts. US transportation efficiency is set to be a hot topic in the decade ahead. Since the book Megatrends2000 was written (around 1989), the US has 'spent' it's access to cheap oil on the bigger and better (with emphasis on the bigger!) Meanwhile the UK and Europe as a whole have -via taxes- spent it on the so called 'European Social Model' -i.e. distribution of tax wealth in an attempt to create a fairer kinder society with mixed results. In addition there have been numerous 'asset price bubbles' since the early 90s as all the extra wealth and credit generated has sloshed around the system, the latest being the global property asset price bubble. Once the period of ‘easy oil’ is over it will be increasingly delusional to believe that either model is sustainable. Whether a solution can be found and whether the world can adjust its consumption habits either by tight government regulation or market forces (read: acute personal hardship) will decide civilisations fate in the decades post 2020. The governments of the Western World are currently deceiving their populations in the easiest and cruelest sense: namely that ‘Business As Usual’ will ‘see us right’ in the decades ahead. It is clear that -at least the UK government- has no real contingency planning in place when it comes to what lies ahead wrt Energy prices. It remains to be seen whether the dynamics of Democracy permits a bitter pill to be taken now in order to cure a patient who is effectively unaware of the extent of their illness.
Quote of the section: ” The signal failure of public debate in this country [The USA] is embodied in our obsession with this particular theme -- how to keep the cars running by other means at all costs. Everybody from the greenest enviros to the hoariest neoliberal free market pimps believe that this is the only thing we need to worry about or talk about. The truth, of course, is that we have to make other arrangements for virtually all the major activities of everyday life -- farming, commerce, transport, settlement patterns -- but we are so over-invested in our suburban infrastructure that we cannot face this reality.” –Jim Kunstler
Scenarios for 2020 wrt Energy Positive: A global awareness –and hence demand and acceptance of the need for action- permeates public and government conscious. Mankind’s ingenuity has been fully harnessed to address the key issues –not just pay lip service to them. People are changing their consumption and lifestyle patterns to be more in-line with the environment they face. Products have become geared heavily towards energy efficiency. Mass long haul tourism remains viable but is now legally obliged to offset any impact by carbon trading; plans for a new generation of low emission hydrogen or Ammonium powered ‘Cryoplanes’ are firmly on the drawing board. Coal fired plants are springing up like mushrooms to offset decline in oil but fully harness technology to neutralize otherwise harmful carbon emissions. Negative: Business As Usual is followed; there continues to be little mass recognition of any impending resource crisis. Technological innovation remains slow and driven purely by market forces. Coal liquefaction and forced oil production are increasingly polluting and damagingly exploiting the remaining reserves. Coal plants spew vast amounts of carbon and pollutants -including Uranium particles- into the atmosphere.
Trend Extrapolation A world of decreasing oil production without replacement would imply a slowing global economy, a major trend reversal of the past 500+ years of steadily growing trade and globalisation that has accelerated dramatically in the past 60 years. It is highly likely that one non-renewable will be simply replaced with others whose lifetimes are themselves limited, thereby simply postponing the inevitable. As fossil fuels have increasingly been used to increase the carrying capacity of the Earth for it’s human occupiers a decline could seriously impact human population levels without a replacement strategy. Indeed it is entirely possible that should a successful transition not be made our entire society as we know it at the turn of the 21st century will collapse and never be revived (all easily available energy and resources having been mined and scoured from the land). Alternatively with foresight, ingenuity and a global ‘plan of attack’ we may be able to get over this Malthusian scale predicament and in the latter half of the century enter the ‘sunlit upper pastures’ of a new period when mankind is able to live both within our means and at harmony with the planet. Energy -Summary of MegaTrend for 2010-2020: Non Renewable, Inefficient > Renewable, Efficient
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