| Introduction | | | | reason for this is that demand continues to increase, |
| I hate Doomsdayers as much as the next person, but I | | | | while oil does not. Once this demand line leaves the oil |
| also believe that simply ignoring the truth can be | | | | supply curve a gap begins to form. This gap |
| devastating. This is even more true when dealing with | | | | represents our inability to provide enough supply to |
| the subject of oil. I chose the title of this article based | | | | satisfy demand. The greater the distance between the |
| upon these two facts 1) It would get readers attention | | | | demand line and the oil curve represents a greater and |
| and 2) As dire a topic climate change is, it is not our | | | | greater strain on our economy and our entire way of |
| most threatening concern. Although climate change | | | | life. |
| does threaten our basic ability to survive, so the | | | | The oil companies have been accused of overpricing |
| previous statement is debatable. What I wish to | | | | gas. It is true they have posted record profits. I assure |
| discuss in this paper is the subject of "Peak Oil". I'm | | | | you that they economy will regulate the price of oil |
| sure many of you are familiar with the term in some | | | | based upon supply and demand. Oil companies may |
| way. With gas prices on the rise, any oil related topic is | | | | be tacking on a few cents a barrel. Can we blame |
| bound to be touched upon more than once. My goal is | | | | them? They know that once we are beyond peak oil |
| to try and provide a clearer picture about "Peak Oil". I | | | | they will begin to lose money bringing oil to market. |
| will also attempt to convince my readers that it is a | | | | Yes, the price will rise, but less will be purchased. As |
| topic that we need to address now! Time is running | | | | far as they are concerned they need to make as |
| out and knowledge is the key. | | | | much as they can now, before the majority of the |
| Peak Oil | | | | population finds the price of gas beyond their means. |
| During the 1970s a calculation was made to determine | | | | Wealthier individuals will continue to pay those prices |
| when the United States would reach "Peak Oil". What | | | | and oil will become a status symbol for those who can |
| this means is the point in time when the US would start | | | | afford it. Of course, we won't everreach that point. |
| to see its oil production decline due to a lack of | | | | Things will fall apart long before that. And those |
| untapped oil resources. This study came to be known | | | | millionaires will not remain so for long as the price of |
| as Hubbard's Peak and predicted the US would peak | | | | the dollar continues to plummet. Any smart individual will |
| during the late 1970s. As predicted, the US did peak | | | | keep part of their wealth in the form of gold, silver, and |
| which lead to a brief fuel crisis. Some of you may | | | | precious stones. Land will also retain its value long into |
| remember the lines at the gas pumps. For a short time | | | | the future. The price as far as the dollar is concerned |
| we said "Never Again" and we bought more fuel | | | | may cause it to seem that land is worthless, but its |
| efficient cars. No more would we waste this precious | | | | true value cannot be touched by currency. If things |
| resource. As time went by and as the US began to | | | | keep going the way they are than what is in our |
| secure oil supplies from overseas, it wasn't long before | | | | pockets will end up as nothing more than pretty green |
| we were back to our old ways. Fast forward 25 | | | | cotton paper. Nothing more. |
| years and the SUV is the norm. That brief scare | | | | House of Cards |
| provided us with a blueprint of what to expect in the | | | | The current state of things is precarious at best. Our |
| future. Rather than a country peaking, we are now | | | | entire way of life is dependent upon oil. We need it to |
| looking at World Oil Supply. | | | | produce our electricity, we need it to produce fuels, we |
| As we are all finding out today, in a very painful way, | | | | need it to lube our machinery we need it to make |
| we have reached "Peak Oil" once again. Only this time | | | | plastics, we need it for our medical industry, the list |
| we are not talking about a country peaking. What we | | | | goes on and on. Put simply, "If you remove oil from the |
| are faced with now is far more worse, and must be | | | | equation, you are left with Nothing!" You name it and I |
| taken far more seriously. Hubbard's equation was | | | | will link it to oil. I am so confident of this that I welcome |
| applied on a global scale. The result was a global peak | | | | any challengers. Simply write a comment about this |
| in world oil supplies sometime between 2005-2014. The | | | | paper and I will reply with a comment. Give it your best, |
| window is narrower than that. The consensus has | | | | but you may be disappointed with the result. |
| been around 2008-09 as the best estimate. The | | | | So here we are today. Gas prices are at $4 a gallon, |
| reason it is hard to nail down an exact year is due to | | | | $5 for diesel. The housing market is in the toilet. The |
| so many deciding factors. Some of which are: | | | | stock market seems to be heading south forever, the |
| 1) current reserves | | | | value of the dollar is in the toilet. The US is 8 trillion |
| 2) any new oil field discoveries | | | | dollars in debt, and the blood of our entire way of life is |
| 3) rate of consumption | | | | running out. I wish I could say that things are going to |
| 4) global demand | | | | turn around, but I just don't see how they can. Not |
| 5) efficiency of use | | | | unless we discover an alternative to oil that allows us |
| 6) weather | | | | to just mine it and burn it. Hydrogen, at this time, |
| 7) war | | | | remains our best hope. It is the most abundant element |
| Just to name a few, the reality is far more complex. | | | | and the easiest to get at. This does not change the |
| As you can see, we are within the range of time | | | | fact that at the present time, oil will be in the process |
| when the world oil supply is supposed to peak. I | | | | somewhere along the chain from production to the |
| believe we are in that time now. I believe we peaked | | | | market. Solar power, hydro, and wind technologies are |
| at some point during the latter part of 2006 or the first | | | | site specific and only addresses the need for |
| few months of 2007. The exact day can be | | | | electricity. Having a solar powered car is one thing, but |
| narrowed around the time at which gas prices began | | | | a solar powered big rig or train is another. I doubt we |
| to climb beyond $2.00 a gallon. When I think back 10 or | | | | will see solar powered 747s and NASA space |
| 12 years I can remember gas only costing 99 cents a | | | | shuttles either. We can solve the personal travel |
| gallon. It did for a long time. Over that period of time | | | | problem, but not the supply line problem. |
| gas prices began to climb steadily. I believe that it was | | | | With Diesel prices at $5 a gallon, truckers have to |
| during this period that we were approaching Peak Oil. | | | | charge more for deliveries. That added cost will |
| When the gas prices began to sky rocket and | | | | eventually get passed onto the consumer. Where |
| fluctuate wildly, we had already crossed the point of | | | | does the consumer pass their extra costs on to? |
| no return. | | | | They can ask for a raise, but it will be a fat chance |
| The signs are all there. Especially looking back over the | | | | that they get it. At the same time we are paying more |
| events of the past 10 years. Much has changed during | | | | and more for gas. We need the gas to get to work to |
| that time period. Speaking with a friend of mine | | | | make money. We need the money to buy food and |
| recently, he relayed an interesting observation he had | | | | other items that are rising in cost. The average |
| made recently. He had visited China some 10 years | | | | American salary will get squeezed at both ends. |
| ago. While he was there he observed the majority of | | | | Bush's tax stimulus would be great if it were not for |
| people walking or riding on bicycles. Upon his return to | | | | the fact that once you get the refund the price of |
| china 10 years later, he observed that every one was | | | | everything will go up and negate those refunds. |
| driving a car. He marveled at how in such a short time | | | | Anyways, isn't it kind of like eating your own arm |
| they had seemed to trade in their bikes for their very | | | | because you are hungry? At best it will only buy us |
| own cars. The point he was making was this, "10 | | | | very little extra time. In the mean time our economy is |
| years ago China was not competing with us for Oil, | | | | cannibalizing itself. |
| the way that they are today." The United States has a | | | | Conclusions |
| population a little over 300 million people. China has well | | | | Unfortunately, I see very hard times ahead of us. Our |
| over 1 billion citizens. Another country has also joined | | | | civility is a luxury of our standard of living. Once that |
| the economic boom, India. India also has over 1 billion | | | | begins to fall apart, the civility goes out the window. |
| citizens. Both China and India are prospering | | | | Now that we have crossed peak oil, it is only a matter |
| economically. Roughly 1/3 of the population of the | | | | of time. Gas prices will continue to rise. Unemployment |
| Earth is now competing with the United States for oil. | | | | rates will rise as companies fold financially. Banks will |
| China's economy is the fastest growing economy | | | | begin to see record numbers of defaulted loans. They |
| ever witnessed. India is close behind. | | | | could foreclose, but who would they be able to sell the |
| For years they looked at the west and envied our | | | | houses to? The price of food will rise, along with the |
| standard of living. Like any normal person would, they | | | | price of everything else. Companies that manufacture |
| wanted to attain our standard of living for themselves. | | | | luxury goods and services will fold first. Consumers will |
| The stage was set. As soon as many developed | | | | only have enough disposable income for food and gas. |
| nation's corporations cam to the realization that they | | | | Eventually the price of gas will get to a point where |
| could increase their profits by setting up shop | | | | people can't afford it. Millions will lose their jobs simply |
| overseas. An ideal country would be on with a large | | | | because they cannot afford to drive there. All the |
| population and a relatively stable government. | | | | while crime is on the rise. People do not adjust as |
| Countries like China and India fit the bill. Over a billion | | | | abruptly as an economy or way of life can. GOD |
| people willing to work for a great deal less money than | | | | forbid we reach the point where it is a free for all. Our |
| any one American would. That wage is probably less | | | | government, police, fire department, military, and health |
| than our minimum wage. This is not to say that | | | | care professionals all have families of their own. They |
| Americans are greedy. Our salaries reflect our | | | | will choose their family, as well they should. |
| economy. We make the wages we due based upon | | | | Best case scenario, we find an alternative energy |
| the costs of things around us. It costs a certain amount | | | | source that will allow us to avoid this impending doom. |
| to transport goods. It then costs a little extra once that | | | | Worst case scenario, World War III is fought over the |
| product comes to market. | | | | remaining oil reserves. |
| We have to be paid an appropriate wage to allow us | | | | Be prepared, that is the best advice that I can give. |
| to purchase those products. If we decided to cut our | | | | Make sure you have at least 1 months supply of food |
| wages to that of what workers in China and India are | | | | on top of your normal supply of groceries. Stock up on |
| making, what good would it do us? Especially when | | | | seeds and plant your own gardens. Make sure you |
| we then would not be able to afford the products that | | | | have flashlights and radios with a crank for power in |
| are waiting for us to buy them. Not a good scenario | | | | addition to battery power. Make sure you have basic |
| for our economy. So, our wages are on par with our | | | | tools such as hammers, shovels, etc. Try and think |
| economic niche. Unfortunately, this means that a | | | | ahead. Picture a scenario and what you will need to |
| company can go else where and have their products | | | | overcome that obstacle. I would also recommend |
| produced at a fraction of the cost, ship those products | | | | having an emergency supply of gasoline for at least |
| to the US, and make a great deal more money than if | | | | one vehicle. With a little planning the coming events can |
| they had that very same product manufactured here. | | | | be dealt with more easily. It would be wise to also |
| Another huge plus for doing business in another | | | | ensure that you have some sort of means to defend |
| country are the regulations. Companies do not have to | | | | yourself, your family, and your property if necessary. |
| deal with pollution controls and other regulations to the | | | | Never underestimate how far desperation can drive |
| extent they would have to in the United States. | | | | another human being. Especially if that human being is |
| The end result is a flood of products entering the US | | | | watching their own child stave to death. Knowledge is |
| with the label "MADE IN CHINA". We don't usually see | | | | power. We may not be able to prevent the down fall |
| the label "MADE IN INDIA", but I seem to get them | | | | of our way of life. What we can try to do is keep our |
| every time I call customer service. The economic | | | | wits about us and be prepared. |
| ramifications of this are clear, but not the focus of this | | | | After thought |
| paper. It is just one of many factors playing a role | | | | I know many who read this may believe that we have |
| during our economic meltdown. What is the focus is | | | | plenty of oil. This is just not true. Even if we tapped into |
| this, "There are over two billion people seeking our | | | | an oil field on protected land, it will only buy us a few |
| standard of living , and they need oil to achieve this!" | | | | years at best. Many of the new wells drilled today go |
| On average 2 new coal plants come on line in China | | | | down into the same exact oil field. The only true |
| daily. Clearly oil alone cannot meet their energy needs. | | | | frontier left is the final frontier. I refer to offshore drilling. |
| What does this mean for the rest of us? It means that | | | | The farther out into the ocean we go the bedrock |
| we now have nearly 8 times the population of the US | | | | gets younger and younger. Younger(New Rock) = NO |
| seeking our way of life. The US is the leading | | | | OIL. It hasn't had time to form. To put it another way, |
| consumer of oil, for now. With China and India | | | | we began really consuming oil during the Industrial |
| breathing down our necks we now have the worlds oil | | | | Revolution, a little over 100 years ago. In that time we |
| supply being consumed at a rat 8 times that of what it | | | | have gone through half of global supply. Single celled |
| was just a few short years ago. | | | | life appeared on earth around 3.3 billion years ago. |
| As demand for oil continues to rise and supply | | | | Assuming that oil came soon after then we can |
| continues to fall, the price of oil will rise sharply. Think of | | | | roughly state the following; "We have burned through |
| our oil supply as a hill with the upside representing the | | | | 1.5 billion years of oil in only 100 years!" Yes, we have |
| past 100 years. The top of the hill represents peak oil | | | | around 150 years of coal, but then we are back to "An |
| and we can place at around 2007. The down slope | | | | Inconvenient Truth". We are living in interesting times. |
| represents the future oil supply, and represents less oil | | | | Peak oil may prove to be the most complex dilemma |
| coming to market at current productions levels. The | | | | we will ever have to face. In the beginning oil cam |
| demand line can be found on the upside of the oil | | | | easy. Something tells me that letting it go will be |
| curve and leaves the oil curve at the peak. The | | | | anything but EASY! |