Hubbert and the Oil PeakVT Law SchoolClass 2

Gary Flomenhofthttp://www.uvm.edu/~gflomenh/VTLAW-EcoEcon

The “OIL PEAK”

Source: Smil (1991)

0

25

50

75

100

1800 1825 1850 1875 1900 1925 1950 1975 2000

Composition of U.S. Energy UseComposition of U.S. Energy Use

wood

animal feed

coal

oil

gas

electricity

Per

cen

t o

f to

tal

ener

gy

use

World GDP and CO2

$1

$10

$100

$1,000

$10,000

$100,000

1000

Energy Rate of Return

Energy Densities of Fuels

Fuel Energy Density (Mj/kg)

Peats, green wood, grasses 5.0-10.0Crop residues, air-dried wood 12.0-15.0Bituminous coals 18.0-25.0Charcoal, anthracite coals 18.0-32.0Crude oils 40.0-44.0

0%

20%

40%

60%

80%

100%

1850 1870 1890 1910 1930 1950

Fuel

DomesticatedAnimals

Labor

Work Done in the U.S. Economy, 1850-1970

The Epoch of Fossil Fuel Exploitation(after Hubbert, 1969)

0-5 -4 -3 -2 -1 +1 +2 +3 +4 +5

Iron inMiddleEast

StonehengeBuilt

Parthenoncompleted

Pyramidsconstructed

Mayanculture

Inquisition

BlackDeath

Magellan'sCircumnavigation

Steam Engine

100

200

300

Tri

llio

n k

wh

per

yea

r

Hubbert Oil Cycle

US Oil Extraction

Results- Various Countries

Algeria (EUR=26.09 BBO)

Mexico (EUR=65.0 BBO)

Norway (EUR=35.2 BBO)

Romania (EUR=7.3 BBO)

0.00

0.10

0.20

0.30

0.40

0.50

0.60

19

60

19

70

19

80

19

90

20

00

20

10

20

20

20

30

20

40

BB

O

HistoricalProduction

PredictedProduction

0.0

0.5

1.0

1.5

2.0

2.5

19

60

19

70

19

80

19

90

20

00

20

10

20

20

20

30

20

40

BB

O

Historial Production

PredictedProduction

0.00

0.02

0.04

0.06

0.08

0.10

0.12

1960

1970

1980

1990

2000

2010

2020

2030

2040

BB

O

HistoricalProduction

PredictedProduction

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

19

60

19

70

19

80

19

90

20

00

20

10

20

20

20

30

20

40

BB

O

HistoricalProduction

PredictedProduction

World Oil Extraction

Various National Patterns United States (EUR = 286 BBO)

02468

101214

1980 1990 2000 2010 2020 2030 2040Bil

lio

n B

arr

els

per

Year

Production

Demand

USA – E.g.. of a net consumer

Venezuela – E.g. of a net producer

High reserves (~ 3000 BBO) and low economic growth scenario

Venezuela (EUR = 95.71 BBO)

0

0.5

1

1.5

2

1980 1990 2000 2010 2020 2030 2040

Bill

ion

barr

els

per

year

Production

Demand

Various National Patterns

United Arab Emirates (EUR=80.63 BBO)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1980 1990 2000 2010 2020 2030 2040

Bil

lio

n b

arr

els

pe

r y

ea

r

Production

Demand

Mexico (EUR = 82.48 BBO)

0

0.5

1

1.5

2

2.5

1980 1990 2000 2010 2020 2030 2040Bil

lio

n b

arr

els

pe

r y

ea

r

ProductionDemand

Mexico– E.g.. of a country that switches over from net producer to net consumer in the future.

U.A.E. – E.g. of a swing producer.

High reserves (~ 3000 BBO) and low economic growth scenario

Forecasting Oil Production

Source : US DOE (EIA), website.

U = ~ 3000 (mean estimate of the USGS 2000).

Peak Production = 2037

World Oil Extraction

World Oil Extraction

World Oil Consumption

World Oil Flows

•Julian Simon view: technological Julian Simon view: technological developments and human ingenuity will developments and human ingenuity will yield more resourcesyield more resources

–““Drowning in oil” Drowning in oil” The EconomistThe Economist, March 6, March 6thth--1212thth 1999, pp. 23-25 1999, pp. 23-25

•Colin Campbell, et al. use Hubbert curves Colin Campbell, et al. use Hubbert curves to predict the end of oilto predict the end of oil

–““The End of Cheap Oil” The End of Cheap Oil” Scientific AmericanScientific American, , March 1998, pp. 78-83 (Campbell and March 1998, pp. 78-83 (Campbell and Laherrere)Laherrere)

Two ViewsTwo Views

S. GS. Gürcan Gülen, ürcan Gülen, Ph.D.Ph.D.

Real Price of Oil since 1869

Real Price of Oil since 1869

Oil Reserve/Production ratio

Oil Reserves

“Proven” oil reserves

Natural Gas Reserves

Natural Gas Reserves

Coal Reserves

Hummer H1Sticker price $106,185

Current lawEquipment deduction $25,000Total tax deduction* $60,722

Bush economic planEquipment deduction $75,000Total tax deduction* $88,722

* Includes bonus tax write-off enacted by Congress in March 2002 and a deduction for normal depreciation.

Sources: Detroit News research, IRS, Taxpayers for Common Sense

Gas Hog Tax Credit

Cars per Thousand People

Source:

JustAuto.com

“Today there are 670 million vehicles in the world. By 2050 that number is expected to increase to 4.5 billion or maybe more.”

Thomas Gross, US DOE

China Energy use 1997

Source: EPA

Heinberg Chapter 1

How to gain an Energy Subsidy

1)Takeover

2)Tool Use

3)Specialization

4)Scope Enlargement

5)Drawdown

Takeover

Biotic Potential / Competitive exclusion

Use / divert: 40% Earth’s terrestrial NPP 25% Total NPP

Drawdown

Deplete non-renewable stocks:Coal, oil, natural gas, uranium, minerals, etc.

Dangers of Drawdown:

Pollution

Climate change

Depletion

Complexity-diminishing returns

Complexity

Increasing costs of:Maintaining organization and controlControlling conquered territoryTaxation

American success

Great natural resourcesEnergy subsidies: slaves then fossil fuelsGlobal trade

Other Extinct cultures

Rapa Nui- (Easter Island)MangaiaMangerevaPitcairnHenderson

Exception:Tikopia