Prepping for Peak: How Fast Can We Change?

Posted by Robert Rapier on October 14, 2007 - 9:30am
Topic: Supply/Production
Tags: oil production, peak oil, saudi arabia

Reading the Tea Leaves

Whether Peak Oil is on top of us now, or we have a few more years
before the downturn, I think it is a problem that we will soon face. I
believe that those born in the 1990's and beyond - like my kids - will
grow up in a world of declining energy resources. And because like
most parents I am deeply concerned about my children's futures, I am
deeply concerned about the ramifications of Peak Oil.

We know the horror stories: Billions dead as oil depletes. Chaos. The
aftermath of Hurricane Katrina played out on a worldwide scale. Many
rational people are anticipating this scenario. (In case you are
completely unfamiliar with the massive die-off arguments, spend some
time at Die Off or Life after the Oil Crash).

Even though I understand the reasoning, my mind just won't accept a
scenario in which billions die. And I would add that I think some
people toss those scenarios around pretty casually, without really
reflecting on the horror of what it would mean if a billion plus
people died of starvation. Look at your family, imagine them starving,
and then imagine this playing out on a horrific scale. That is the
reality of a billion-plus population reduction; a reality that I
honestly don't believe our brains are equipped to handle.

Not a day goes by that I am not thinking about how this is all going
to play out. A lot of variables are going to come into play. How much
time do we have? Will our political leaders ever pass energy
legislation that truly helps to mitigate falling production? Will
production plateau for a few years and then decline, or will it peak
sharply and decline at 5% or more each year? Will we see a totally
unanticipated technology breakthrough? But for me, I think the most
important question is: How fast can we change?

Powering Down

I drive a car that gets 50 mpg, and I don't drive it that many miles a
year. My family will tell you that I keep the house too hot in the
summer and too cold in the winter. In fact, I almost always wear a
jacket in the house during the winter. I am obsessive over our
programmable thermostat; I don't want energy wasted when nobody is
home. My direct fossil fuel usage is maybe 25% of the average usage
for the U.S., and well less than the average for the U.K. (Indirect
usage - like fossil fuels to produce the food I eat - is much harder
to estimate, but one way I minimize this is by minimizing the meat in
my diet).

I don't behave like this because I am cheap. (Don't ask my wife about
that). I try to minimize my fossil fuel usage because 1). I want to be
prepared to make do with less in the near future; 2). I want to know
just how low I can reasonably go if things get really bad; 3). I am
aware of the negative environmental externalities of using fossil
fuels; and 4). I want to set a good example. But if the stakes were
high, could I cut my direct fossil fuel usage even more than I already
have? Yes, I think I could still cut it in half. I have given a lot of
thought to what I would do if the gas stations were out of fuel
tomorrow. It wouldn't be a fun exercise. But I don't think it would be
immediately life-threatening either.

So, if I have identified areas that I can still cut if I have to - and
conservation is already very important to me - then I imagine the
average person has a lot of consumption that they can cut. Those long
commutes? If you had to cut your gasoline usage in half, you would
search hard for a car pool or public transportation. In the longer
term you would get the most fuel efficient car you could get. You
would start cutting out unnecessary trips. At home, you would start to
adjust your thermostat and be more aware of lights and TVs that are
habitually left on.

Don't get me wrong. I don't expect this to be a picnic. I don't expect
technology to save us, but I also don't expect this to be the end of
civilization. On the other hand, I don't completely discount the
worst-case scenarios. I do allow for the possibility. But I think what
we are likely to see is that people will start to Power Down when
supplies start to shrink and fossil fuels become much more expensive.
The best possible situation in my opinion is for Peak Lite to play out
for several years before true peak. This will provide for a less rapid
loss of available supplies, and would give us a better chance at
managing a Power Down.

Conclusion: Planning for the Worst

My personal plans do involve preparing for the possibility that I
could be wrong. You don't prepare for a disaster only if you know
there is going to be a disaster. You try to plan for worst case
scenarios that have a reasonable probability of occurring. (I have no
plan for a Texas-sized asteroid impact). So this is what I have
attempted to do.

I have no debt. My savings are protected against both energy inflation
and a collapsing dollar. The value of my profession should increase as
energy supplies become tighter. My family has a fair amount of
farmland, and I also have my eye on farmland in several locations that
I think would fare well if things go sour. I have a decent amount of
food in storage. But I am hopeful that I never have to put my plans
into action. If we can change fast enough, I don't think I will have to.

Governments could play a huge role here by getting serious about a
long-term energy strategy. But on this point, I don't hold out much
hope as it would require that the public is asked to sacrifice -
usually not something that will make you popular when running for
reelection. It would also require that the rosy scenarios painted by
the EIA are discounted for more conservative assumptions about future
supplies. I think our next best hope is for Peak Oil to soon be widely
recognized as a serious threat, and then we have a plateau or slow
decline so that governments have some time to get their acts together.
But I think this is going to require a few more price spikes ($100
oil?) before Peak Oil becomes conventional wisdom.

Note

I posted this essay first on my blog, and several commented that it
was uncharacteristically dark for me. It certainly wasn't intended to
be. Rather, I am trying to share the constant internal debate that I
go through regarding Peak Oil. Where I am at is that I am optimistic,
because we do have great capacity for change. On the other hand, I am
an optimist by nature, and I recognize this. So I am able to step into
the role of pessimist and take the worst-case scenarios seriously
enough to have contingency plans.

Coming Soon

As I wrote in the March 4, 2007 Drumbeat:

So, count me among those who still don't think Saudi has peaked.
If fact, I think you will see their decline stop by summer, and if
demand picks up you will see their production head back up. If that
happens, I suspect a lot of people around here are suddenly going to
develop amnesia regarding all the predictions that have been made.

I took a lot of flack (to put it mildly) earlier in the year regarding
my arguments on Saudi, but it is about time to revisit those
involuntary decline scenarios that were so popular in early 2007 -
when I was predicting the decline would soon stop. Those who favored
the involuntary decline hypothesis may want to go back and look at
where Saudi production was predicted to be in late 2007 based on
assumptions of no spare production and an involuntary production
decline. Even if we discount Saudi's recent announcements that they
will raise production, steady production is inconsistent with
involuntary decline and no spare capacity.

While this doesn't settle the question of whether Saudi has peaked,
their steady production is in the process of falsifying those
declining trendlines that were predicting 8 million bpd or lower by
year end. Earlier this year I allowed myself to get dragged into
endless debates over this issue, when it clearly would not be
illuminated until later in the year. Well, later in the year is here,
and Saudi production has been constant since February.

At the latest, I will take a look back in a year-end post in which I
will also discuss the results - win or lose - of the $1000 bet on oil
prices; a bet that I made because of my confidence that Saudi was
voluntarily reducing production to keep prices high, and that they
were sitting on some spare capacity. The collapsing dollar has made
this interesting, but I still think we will end up closer to my
predicted year end of $73.50 than $100.