This is a guest post by Verwimp Bruno.
All views expressed here are those of Verwimp Bruno and do not necessarily represent those of Ron Patterson.
Peak Oil is the moment in time when, on a global scale, the maximum rate of oil production is reached. The moment after which oil production, by nature, must decline forever. Since Earth is a closed system, next to this production (supply) event, there must be an equal demand event: Peak Oil Consumption. Since there are no substantial above ground deposits, Peak Oil Production and Peak Oil Consumption must coincide. The world consists of a lot of different countries, some of which are already far beyond peak oil production That leads to the assumption the world as a whole reaches peak oil production. On the demand side, it is worth looking, because different countries have different economies, different degrees of development, and so on, if, while some countries still experience significant growth in oil consumption, some countries are already well beyond Peak Oil Consumption by now.
2. PRODUCTION vs CONSUMPTION
The production history of crude oil is well documented. For all relevant OPEC and NON-OPEC countries the data are gathered by Peakoilbarrel.com here, OPEC Charts, and here, Non-OPEC Charts, respectively. It is clear some countries have reached peak oil production long time ago. For readers of this blog, familiar with these data, this is no surprise. Still world oil production is growing, because some countries make up for the countries that are losing production. Many readers of Peakoilbarrel.com wonder when the exact moment will be when global oil production will have reached that ultimate peak. But how relevant is that moment? Will it bring doom, gloom, the end of motoring, plastics and tooth paste. It might be more interesting to know whether your country is before, beyond or at Peak Oil Consumption right now. And what about coal and natural gas?
3. THE BELL-SHAPED CURVE
Finite resources tend to be exploited as fast as possible, resulting in an ever increasing “production” (“mining” is the more correct term), until a limit is reached, after which production declines. The result is the bell-shaped curve M. K. Hubbert showed the world in A.D. 1956:
We all know this curve did not materialize exactly this way. The peak was set at 13billion barrels per year, while the world produces some 32 billion barrels per year now. Nevertheless that production must decline sooner or later. Oil is still a finite resource.
In A.D. 1972 researchers from M.I.T. wrote Limits to Growth, Report to the Club of Rome. They analyzed the word as a whole and took different parameters into consideration: Finite resources, finite absorbing capacity of the world’s ecosystems (climate!) and human population. The standard run of their model looked like this:
In this graph resources are depictured as an inverse cumulative function, starting at 100% in the upper left corner and ending at near zero in the bottom right corner. When that graph wouldn’t have been cumulative, it would have been a bell-shaped curve. The ‘industrial output per capita’ curve reflects the use of resources and is indeed bell-shaped. The graph with the ‘S’-dots, indicates services per capita. That graph goes higher than industrial output, and starts to decline later. The contemporary deindustrialization of the USA and Europe, and their growing service economies are in line with the standard run of the World Model.
In june 2015 the leaders of the G7 gathered in Schloss Elmau, Germany, for their annual Summit. Afterwards the Leadersʼ Declaration was released. A chapter is dedicated to climate change. The leaders say: “Mindful of this goal (to hold the increase in global average temperature below 2 °C. ) … we emphasize that deep cuts in global greenhouse gas emissions are required with a decarbonisation of the global economy over the course of this century. Accordingly… we support … the upper end of the latest IPCC recommendation of 40 to 70% reductions by 2050 compared to 2010 … .
When the evolution of the energy consumption of the world, of which nowadays approximately 85% consists of greenhouse gas generating fossil fuels, is extrapolated to the end of the century, when a fixed point of nearly 0% fossil fuels at A.D. 2100 and a fixed point of “40 to 70% reduction by A.D. 2050”, say 50% reduction, is set, when the current growth in use of fossil fuels is gradually turned in an as moderate as possible decrease, meeting the two fixed points, when the evolution of nuclear, solar, wind, hydro and biomass is counted in in an optimistic way, the future looks like this diagram:
The G7, from a climate change point of view, Hubbert from a finite resources point of view and the Club of Rome from a combined point of view, they all predict roughly the same bell-shaped curve. So the bell- shaped curve is going to be it. Notice there is no significant distinction between oil, coal and gas.
4. AVAILABILITY AND AFFORDABILITY OF ENERGY AS A LIMIT
Different countries in the world have different economies, different degrees of development, different GDP/capita ratio and so on. But if the world as a whole is projected to walk along this bell-shaped trajectory, it is reasonable to hypothesize every country on itself will follow that trajectory sooner or later. Recent data until A.D. 2014, collected by BP, seem to already give evidence of this hypothesis.
World energy consumption equals 500 exajoules per year. The curve shows growth. So availability is not yet a problem.
The former Soviet Union consumes a little less than 40 exajoules. That is 8% of the global consumption and about 25% lower than their peak in 1991. It is clear the Former Soviet Union might never again reach the >50 exajoules they used to consume.
Europe minus the Former Soviet Union consumes 60 exajoules per year. That equals 12 % of the world energy consumption. The decline since 2006 is 18%. That is significant and severe.
North America consumes 110 exajoules per year. That equals 22% of the world energy consumption. The dedline since 2008 is about 5%. That might not be statistically significant. Nevertheless: there has been no more growth since 2000. On the global timescale 15 years is a significant period of time.
All the above summed up, equals 42% of the world energy consumption. Add Japan, Australia and South Africa, with stagnant or declining energy consumption too, and the conclusion is: “Half of the world’s energy production is consumed in countries with declining or stagnant energy consumption. These are all the mature first world economies.
The decline in energy consumption might be caused by local availability issues or affordability issues. Most probable explanation might be: heavy industries have left these countries, the poor and the elderly –groups with less than average energy consumption- are growing groups in these societies.
The above graph, in Mtoe, is constructed using Hubbert Linearization. This technique is unreliable unless the available data suggest the bell-shaped curve has already gone thru its first infliction point, and it gains reliability when the peak is reached or passed. This means there are enough data for the world, for Eurasia and for North America. There are not enough data for Asia-Pacific, nor for south and Central America, Africa and the Middle East. To reduce the mathematical problem to a system of two equations and two unknown variables, South and Central America, Middle East and Africa were grouped and called “Scamea” in the graph.
The sudden drop in 2015 is artificial. It results from the fact that the latest data points in the linearization of the global data are slightly above the trend line.
The results of this exercise are:
– Europe and the former Soviet Union (Eurasia), has peaked.
– North America has peaked.
– Asia Pacific is peaking as we speak.
– The group consisting of South and Central America, the Middle East and Africa had a large potential for growing energy consumption.
6. OIL, COAL, GAS
Historical data show the growth in coal, oil and gas consumption vary widely in time and space. But the decline of coal, oil and gas consumption coincides more or less, especially in times of crisis: Former Soviet Union post 1990 and Europe post 2006. This supports affordability, rather than availability is the root cause of declining consumption. This thesis is often proposed by Gail Tverberg.
More than half of the world’s oil production is traded on the international markets. Still Net Export Mathematics, or the Export Land Model, shows severe concern about future oil availability to importing nations. For gas only a third of the world’s production is traded on the international markets. For coal it is only a fourth. Applying ELM on coal or gas will paint a grim future for importing countries as well as for countries dependent on the revenue of their exports.
Peak Oil translates into Peak Oil Consumption. Peak Oil Consumption comes with Peak Energy Consumption. Half of the world has passed the point of maximum energy consumption. This point is marked by large scale economic crisis. Asia Pacific is approaching that point now. For energy importing countries with still growing energy consumption Peak Energy Consumption may rather be triggered by coal or gas, since these global markets are tighter than the oil market. Renewables do not play any role.
All data: BP 2015. BP Statistical Review of World Energy June 2015
Limits to growth, Meadows et. Al., Universe Books, 1972.
G7 Leaders’ Declaration, G7 Germany, 2015.
Hubbert, M. K., Nuclear energy and the fossil fuels, Drilling and petroleum practice, American Petroleum Institute, 1956.
Graphs: by www.mazamascience.com
Other graphs: by author.