Oil Supplies &the ComingGlobal EnergyCrisisSeth Cook, PhDJune 13, 2012
Is climate change the only problem with fossil fuels?
Oil spills highlight the downside of the fossil fuel based economy
We‟ve forgotten about the biggest problem:          fossil fuels are FINITE
My father rode a camel.      I drive a car.My son flies a jet plane.His son will ride a camel.                 - Saudi say...
To understand our present predicament, we need tounderstand the special qualities of fossil fuels• the release of enormous...
Fossil fuels made modern industrial society possible• This abundant energy available to  drive production processes  enabl...
Human vs. machine power150 watts
Human vs. machine power100 hp engine                 2000 people
Imagine pushing your car 20-30 miles (32-48 km)
The energy slaves of modern man• if we add up the power of the  machines running on fossil fuels  that we rely on to light...
Oil – the master resource & most important commodity• Oil is the lifeline of the global  economy• Our primary transportati...
Oil is everywhere                    13
Oil is everywhere
Oil – an ideal fuel & raw material• cheap & abundant (at least  until recently)• energy dense• easily transportable• capab...
World‟s first oil wellPennsylvania, USA 1859
Global oil consumption• since 1859, the world has  consumed about 1 trillion  barrels of oil• we consume about 85 million ...
It‟s not about running out• the global economy  depends upon cheap and  abundant energy• in the 20th century, energy  was ...
From easy oil to tough oil© BP 2011
World oil production and prices 2002-2010  Production (million barrels per day)                                           ...
What is peak oil?    "The term Peak Oil refers to themaximum rate of the production of oil in             any area under c...
The US Oil Production Story
M. King Hubbert: Energy Visionary• Fields peak when ½ the oil  has been extracted• There is a time lag of about  25-40 yea...
Predictions of peak oil       Projected Date            Source of Projection        Background          2006 - 2007       ...
Why is the timing of peak oil so uncertain?• if valid data were available in the public domain, determining  the date of p...
OPEC‟s oil reserves are inflated• Kuwait added 50% in 1985 to  increase its OPEC quota, which  was based partly on reserve...
Oil exporters rising domestic oil consumptionUnit: thousands of barrels per dayExporting          2000      2001     2002 ...
Discoveries of oil• In order to produce oil, one first  has to discover it; this is an often  overlooked fact• Most of our...
Types of Oil• Conventional Oil: petroleum found in liquid form, flowing naturally  or capable of being pumped at reservoir...
Unconventional oil: will it solve the supply problem?• Canadian tar sands   – estimated up to 1.7 trillion barrels   – cur...
EROEI – energy return on energy invested (net energy)
EROEI – energy return on energy invested (net energy)                            Ein     Energy     source                ...
“Balloon graph” representing quality (y axis) and quantity (x axis)                                       of various fuels...
Dr. Fatih Birol, Chief Economist, IEA• After a detailed survey of over  800 oil fields, the IEA revised its  estimates of ...
The Hirsch Report: a seminal study on peak oil• conclusions:   – Waiting until world oil production peaks before taking   ...
Why will the transition be so time consuming?• energy transitions are inherently slow and large scale• there are no altern...
The Hirsch Report: conclusions• “Oil peaking will create a severe liquid fuels problem for  the transportation sector”• “P...
Geopolitics: the lessons of previous oil shocks• in 1973, Arab members of OPEC imposed an oil embargo on the  U.S. and Wes...
Iran: potential trigger to significantly higher oil prices?• Iran‟s oil production & exports     – produces 4.2 million ba...
Converging trends: why time is not on our side• global oil production is flat while demand is rising, especially in the de...
What are the alternatives?• Shale gas / oil• Gas to liquids• Coal to liquids• Biofuels• Hydrogen• Other renewables• Electr...
Can the current form of globalization be maintained in anera of increasingly scarce and expensive oil?
How will the airline industry fare in a tough oil world?
Modern agriculture: using land to turn fossil fuels into food
Each calorie of food requires 7-10 calories of fossil fuelsto get to one‟s plate
What is the future of modern agriculture?• industrial agriculture as currently  practiced is unlikely to be viable in  a p...
Can present / projected population levels be sustained?    Source: Joint Operations Environment Report 2010 (based upon UN...
Will the competition for resources lead to militaryconflict?
What can you expect?– high gasoline prices are here to stay – get used to it!– higher food prices– rising inflation– reces...
Implications ofthe ComingEnergy Crisisfor China
China & Oil• China was a net oil exporter  until 1992• China became a net oil  importer in 1993• China‟s oil import rate  ...
China‟s Energy Consumption                                                                         Hydro,                 ...
China‟s Oil Consumption by Sector (%)Sector                                               1990   2009Agriculture, Forestry...
China‟s Crude Oil Imports by Source 2010                                                    Brazil                        ...
Growth of China‟s Net Crude Oil Imports                                       (Expected) Source: China Daily 3 February 2012
China‟s Vehicle Stock (millions)908070                                                  Others60                          ...
Conclusions:• China’s oil consumption cannot continue to grow at present  rates; there is simply not enough oil out there•...
US Oil Consumption & Production                                          US Domestic Crude Oil Production by Source, 1990-...
US energy mix
The US: a suburban country
"He ought to be taking advantage  "As a country that has 2% of the                                          of all of our ...
World gasoline prices ($US/gallon)  10    9    8    7    6    5    4    3    2    1    0          la  ia  i t pt ria a n i...
The age of cheap and abundant resources is over• Americans – and the world  – haven‟t grasped this yet• Not just oil:   – ...
We‟re in for a bumpy ride:The next 20 years will not be anything like the last 20 years
ConclusionsDue to geological and geopolitical reasons, a global energy crisis centering on liquid fuels is likely in the n...
Thank you!contacts: sncook88@gmail.com
The Shale Gas Revolution• IEA is now referring to a „golden  age of gas‟• „hydraulic fracturing‟ or just  „fracking‟• Hori...
Shale Gas: Boon or Bane?• Requires vast amounts of water:  2m-4m gallons per well + 15,000-  60,000 gallons of chemicals• ...
Further readingOverviews• The Impending World Energy Mess, by Robert L. Hirsch et al• Peak Everything: Waking Up to the Ce...
China‟s Share of World Commodity Consumption (2009-10)             Commodity         China’s % of World              Cemen...
German military think tank report on peak oil• Conclusions of the report by the Bundeswehr Transformation  Center (leaked ...
Causes & consequences of the oil shock of 2007-08                             • “Whereas  historical oil price            ...
Oil Depletion & the Coming Global Energy Crisis, Seth Cook (June 2012)
Oil Depletion & the Coming Global Energy Crisis, Seth Cook (June 2012)
Oil Depletion & the Coming Global Energy Crisis, Seth Cook (June 2012)
Oil Depletion & the Coming Global Energy Crisis, Seth Cook (June 2012)
Oil Depletion & the Coming Global Energy Crisis, Seth Cook (June 2012)
Oil Depletion & the Coming Global Energy Crisis, Seth Cook (June 2012)
Oil Depletion & the Coming Global Energy Crisis, Seth Cook (June 2012)
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Oil Depletion & the Coming Global Energy Crisis, Seth Cook (June 2012)

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The 20th century was an era of cheap and abundant resources. Global energy supplies expanded dramatically. But in the early decades of the 21st century, we have already entered an era of scarce and expensive resources. In fact, in this century we may even see a contraction of global energy supplies, particularly of oil. We are perched on the verge of a global energy crisis, although very few people are aware of it, including energy experts.

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  • Oil Depletion & the Coming Global Energy Crisis, Seth Cook (June 2012)

    1. 1. Oil Supplies &the ComingGlobal EnergyCrisisSeth Cook, PhDJune 13, 2012
    2. 2. Is climate change the only problem with fossil fuels?
    3. 3. Oil spills highlight the downside of the fossil fuel based economy
    4. 4. We‟ve forgotten about the biggest problem: fossil fuels are FINITE
    5. 5. My father rode a camel. I drive a car.My son flies a jet plane.His son will ride a camel. - Saudi saying
    6. 6. To understand our present predicament, we need tounderstand the special qualities of fossil fuels• the release of enormous amounts of cheap energy from fossil fuels enabled the growth of industry, population, consumption and technological innovation• Oil, coal and natural gas were produced by natural processes over millions of years• they are FAR more concentrated forms of energy than the sources previously available to humanity (e.g. food crops, human & animal muscles, windmills, etc.)
    7. 7. Fossil fuels made modern industrial society possible• This abundant energy available to drive production processes enabled increased extraction rates of other natural resources – e.g. chainsaws, trawlers, etc.• Modern farming machinery powered by fossil fuels made it possible for small number of farmers to feed large populations – this in turn enabled massive urbanization• Modern chemistry (largely based on organic compounds derived from fossil fuels) gave rise to modern pharmaceuticals – facilitated longer lifespans & growing populations
    8. 8. Human vs. machine power150 watts
    9. 9. Human vs. machine power100 hp engine 2000 people
    10. 10. Imagine pushing your car 20-30 miles (32-48 km)
    11. 11. The energy slaves of modern man• if we add up the power of the machines running on fossil fuels that we rely on to light and heat our homes, transport us and keep up our lifestyles and compare that to the amount of power generated by the human body:• the average American has the equivalent of over 150 energy slaves working for them 24/7• a middle class person today has an unimaginable standard of living compared to previous periods, largely due to fossil fuels
    12. 12. Oil – the master resource & most important commodity• Oil is the lifeline of the global economy• Our primary transportation fuel (94% of transport is powered by oil) – gasoline for cars – diesel fuel for trucks & buses – jet fuel for airplanes – bunker fuel for ships• Cheap oil has made globalization possible• Oil is the raw material for a vast array of industrial products
    13. 13. Oil is everywhere 13
    14. 14. Oil is everywhere
    15. 15. Oil – an ideal fuel & raw material• cheap & abundant (at least until recently)• energy dense• easily transportable• capable of being refined into different fuels (e.g., gasoline, kerosene, diesel, bunker fuel, etc.)• suitable for a variety of uses, including transportation, heating, production of agricultural chemicals and many many other materials
    16. 16. World‟s first oil wellPennsylvania, USA 1859
    17. 17. Global oil consumption• since 1859, the world has consumed about 1 trillion barrels of oil• we consume about 85 million barrels a day• over 30 billion barrels a year• at least 1 trillion barrels of economically recoverable oil left in the ground, probably more• so what‟s the problem???
    18. 18. It‟s not about running out• the global economy depends upon cheap and abundant energy• in the 20th century, energy was cheap and abundant, but that era has ended• we are now in the era of scarce and expensive energy which is increasingly difficult to extract• that is going to change everything
    19. 19. From easy oil to tough oil© BP 2011
    20. 20. World oil production and prices 2002-2010 Production (million barrels per day) Price (dollars per barrel)From Tom Whipple 2010. Sources: Production data from U.S. Energy information Administration, “February2010 International Petroleum Monthly,” March 10, 2010, http:// www.eia.doe.gov/ipm/supply.html; price datafrom U.S. Energy information Administration, “World Crude Oil Prices,” accessed April 7, 2010,http://tonto.eia.gov/dnav/pet_pri_wco_k_w.htm.
    21. 21. What is peak oil? "The term Peak Oil refers to themaximum rate of the production of oil in any area under consideration, recognizing that it is a finite natural resource, subject to depletion." - Colin Campbell
    22. 22. The US Oil Production Story
    23. 23. M. King Hubbert: Energy Visionary• Fields peak when ½ the oil has been extracted• There is a time lag of about 25-40 years between an oil field‟s initial development and that field‟s peak production
    24. 24. Predictions of peak oil Projected Date Source of Projection Background 2006 - 2007 Bakhitari, A.M.S. Iranian oil executive 2007 - 2009 Simmons, M.R. Investment banker After 2007 Skrebowski, C. Petroleum journal editor Before 2009 Deffeyes, K.S. Oil company geologist Before 2010 Goodstein, D. Vice Provost, Cal Tech Around 2010 Campbell, C.J. Oil company geologist After 2010 World Energy Council NGO 2010 - 2020 Laherrere, J. Oil company geologist 2016 EIA DOE After 2020 CERA Energy consultancy 2025 or later Shell Major oil company No visible peak Lynch, M.C. Energy economistSource: Hirsch et al 2005
    25. 25. Why is the timing of peak oil so uncertain?• if valid data were available in the public domain, determining the date of peak oil and the subsequent rate of decline would be a simple matter• however, valid data is not publicly available – instead, there is a maze of conflicting information – OPEC countries‟ reserve data is closely guarded – oil companies are afraid of their share prices declining should their actual reserve data become public – so experts are left to piece together the incomplete and often conflicting data
    26. 26. OPEC‟s oil reserves are inflated• Kuwait added 50% in 1985 to increase its OPEC quota, which was based partly on reserves; no new discoveries had been made• Venezuela doubled its reserves in 1987 by the inclusion of large deposits of heavy oil that had been known for years• Other OPEC countries responded with huge increases• Note how the numbers have Source: Colin Campbell 2000 changed little since despite production
    27. 27. Oil exporters rising domestic oil consumptionUnit: thousands of barrels per dayExporting 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010CountryRussia 2698 2688 2730 2755 2767 2777 2893 2913 3036 2936 3199Saudi Arabia 1578 1622 1668 1780 1913 2001 2074 2200 2387 2624 2812Iran 1304 1322 1423 1509 1578 1641 1728 1718 1822 1787 1799Kuwait 249 253 273 296 327 359 333 338 359 399 413Qatar 60 73 84 95 107 122 136 153 174 176 220UAE 396 400 439 488 515 553 584 617 654 616 682Algeria 191 198 221 230 239 250 258 286 309 327 327Venezuela 559 622 660 535 582 628 661 682 712 729 765Ecuador 128 131 130 136 140 166 179 193 203 216 226Source: BP Statistical Review of World Energy June 2011
    28. 28. Discoveries of oil• In order to produce oil, one first has to discover it; this is an often overlooked fact• Most of our current oil production comes from fields discovered in the 1960s & 1970s• Oil discoveries peaked in 1960s• We now consume 4 barrels of oil for every 1 we discover• Declines in oil discoveries eventually must translate into declines in production
    29. 29. Types of Oil• Conventional Oil: petroleum found in liquid form, flowing naturally or capable of being pumped at reservoir conditions without further processing or dilution.• Unconventional Oil: heavy oil, shale oil, tar sands (bitumen) are considered to be unconventional oil resources. These compounds have a high viscosity, flow very slowly (if at all) and require processing or dilution to be produced through a well bore.• Natural Gas Liquids (NGLs) are those portions of the hydrocarbon resource that exist in gaseous phase when in natural underground reservoir conditions, but are in a liquid phase at surface conditions.• Conventional oil provides most of the oil produced today, and about 95% of all oil that has been produced so far. – it is the most important form of oil and will continue to dominate supplies for some time Source: Hirsch et al 2010: 53
    30. 30. Unconventional oil: will it solve the supply problem?• Canadian tar sands – estimated up to 1.7 trillion barrels – current production: 1.5 million bpd – projected: 3 million bpd by 2020 – processing requires huge amounts of water & energy – produces giant lakes of oily water – CO2 emissions higher than conventional oil production• Venezuelan heavy oil – estimated 500 billion barrels of recoverable reserves – perhaps the largest source of untapped petroleum on the planet – converting this heavy oil into useable petroleum requires vast amounts of energy and money © Peter Essick, National Geographic
    31. 31. EROEI – energy return on energy invested (net energy)
    32. 32. EROEI – energy return on energy invested (net energy) Ein Energy source Energy extraction Eout (profit) Eout Energy return on energy invested = Ein
    33. 33. “Balloon graph” representing quality (y axis) and quantity (x axis) of various fuels in the US economy at various timesSource: Prof. Charles Hall: http://theoildrum.com/node/3810
    34. 34. Dr. Fatih Birol, Chief Economist, IEA• After a detailed survey of over 800 oil fields, the IEA revised its estimates of oil depletion rates upwards from 3.7% to 6.8%• “When we look at the oil markets, the news is not very bright. We think that crude oil production has already peaked in 2006.”• “The existing fields are declining sharply, in the North Sea, in the United States, in the Gulf of Mexico. Just to stay where we are today, we have to find 4 new Saudi Arabias. This is a tall order.”
    35. 35. The Hirsch Report: a seminal study on peak oil• conclusions: – Waiting until world oil production peaks before taking action leaves the world with a significant liquid fuel deficit for more than two decades – Initiating a mitigation crash program 10 years before the peak leaves a liquid fuels shortfall roughly a decade after the peak – Initiating a crash mitigation program 20 years before peaking appears to offer the possibility of avoiding a world liquid fuels shortfall
    36. 36. Why will the transition be so time consuming?• energy transitions are inherently slow and large scale• there are no alternative energy sources that are currently competitive with oil in the transportation sector• any transition to more fuel efficient vehicles will require decades and trillions of dollars – existing capital stock can only be replaced gradually – would normally require 25-30 years to replace – more energy efficient vehicles equipment can only be gradually phased in as new capital stock replaces existing stock
    37. 37. The Hirsch Report: conclusions• “Oil peaking will create a severe liquid fuels problem for the transportation sector”• “Peaking will result in dramatically higher oil prices, which will cause protracted economic hardship in the United States and the world.”• “In the developed nations, the problems will be especially serious. In the developing nations peaking problems have the potential to be much worse.”• “Intervention by governments will be required, because the economic and social implications of oil peaking would otherwise be chaotic.”
    38. 38. Geopolitics: the lessons of previous oil shocks• in 1973, Arab members of OPEC imposed an oil embargo on the U.S. and Western European countries in retaliation for their support to Israel in the Yom Kippur War – quadrupling of world oil prices – long lines at the gas pumps – U.S. economy was severely affected – showed that the economic well being of developed countries was dependent upon a steady flow of cheap oil• in 1979, the Iranian revolution led to a steep decline in Iran‟s oil exports – worldwide oil shortages ensued – world oil prices spiked – signified that internal conflict in an oil exporting country could significantly affect global oil supplies and prices• these crises were caused by political events, not by absolute declines in oil supplies
    39. 39. Iran: potential trigger to significantly higher oil prices?• Iran‟s oil production & exports – produces 4.2 million barrels a day – exported 2.2 million barrels a day before sanctions• 17 million barrels of oil a day pass through the Strait of Hormuz• if military conflict were to break out with Iran, or if Iran were to somehow block the Strait, would be catastrophic for oil supplies
    40. 40. Converging trends: why time is not on our side• global oil production is flat while demand is rising, especially in the developing world• due to steep decline rates in existing oil wells, producers are hard pressed simply to maintain current production rates• oil discoveries peaked in the 1960s and have been declining ever since• oil reserves have been inflated for political reasons• consumption is rising steadily in key oil producing nations, which will eventually lead to declines in exports• we‟ve used up most of the easy oil; what remains is tough oil• unconventional sources are unlikely to resolve the supply situation due to their low net energy and serious environmental problems• there are no alternative energy sources that are competitive with oil in the transportation sector• political instability in the Middle East is pushing high oil prices up further• prices could skyrocket if hostilities break out with Iran
    41. 41. What are the alternatives?• Shale gas / oil• Gas to liquids• Coal to liquids• Biofuels• Hydrogen• Other renewables• Electrified transport• ConservationNo easy answers!
    42. 42. Can the current form of globalization be maintained in anera of increasingly scarce and expensive oil?
    43. 43. How will the airline industry fare in a tough oil world?
    44. 44. Modern agriculture: using land to turn fossil fuels into food
    45. 45. Each calorie of food requires 7-10 calories of fossil fuelsto get to one‟s plate
    46. 46. What is the future of modern agriculture?• industrial agriculture as currently practiced is unlikely to be viable in a post-peak oil world• this implies major changes in the way we produce, transport and market food• it could very likely mean a larger proportion of the population will need to be engaged in farming, the opposite of current trends• agriculture may have to become much more localized than it is now
    47. 47. Can present / projected population levels be sustained? Source: Joint Operations Environment Report 2010 (based upon UN Population Reference Bureau)
    48. 48. Will the competition for resources lead to militaryconflict?
    49. 49. What can you expect?– high gasoline prices are here to stay – get used to it!– higher food prices– rising inflation– recession (past oil shocks have caused recessions)– sectors which are sensitive to oil prices (e.g. airlines, trucking, agriculture, etc) will be hit hard– air ticket prices are likely to be much higher in the near future– the world economy will be hit hard, and all nations will be affected
    50. 50. Implications ofthe ComingEnergy Crisisfor China
    51. 51. China & Oil• China was a net oil exporter until 1992• China became a net oil importer in 1993• China‟s oil import rate surpassed 50% in 2009; estimated to be 56% today• In 2010, China accounted for 10.6% of global oil • Fuel prices in China are consumption controlled by NDRC• 9 million barrels per day or 428 • NDRC raised fuel prices for million tons annually the 2nd time this year by more than 6% to reflect int‟l crude oil price hikes
    52. 52. China‟s Energy Consumption Hydro, Hy dro, Nuclear, Nuclear, Wind Natural Gas Wind 8.6% 3.2% 3.4% Natural Gas 4.4% Crude Oil 22.7% Crude Oil 19.0% Coal Coal 68.0% 70.7% 1978 2010Source: China Statistical Yearbook 2011
    53. 53. China‟s Oil Consumption by Sector (%)Sector 1990 2009Agriculture, Forestry, Fisheries, Animal Husbandry 8.9 3.4and Water ConservancyIndustry 63.7 40.9Construction 2.8 5.0Transport, Storage and Postage 14.7 35.3Wholesale and Retails Trades, Hotels, Catering 0.7 1.1ServicesOther Sectors 6.6 5.9Residential 2.5 8.3Total 99.9 99.9Source: China Statistical Yearbook 2011
    54. 54. China‟s Crude Oil Imports by Source 2010 Brazil Kuwait Kazakhstan 3% 4% 4% Libya Sudan 5% 3% Others Russia 6% Saudi Arabia Others Angola 19% Iraq Oman 7% Iran Oman Russia Iran Sudan 9% Kuwait Kazakhstan Brazil Iraq Libya 5% Saudi Arabia 19% Angola 16% Source: http://www.brookings.edu/research/papers/2011/07/china-energy-zhang
    55. 55. Growth of China‟s Net Crude Oil Imports (Expected) Source: China Daily 3 February 2012
    56. 56. China‟s Vehicle Stock (millions)908070 Others60 Trucks Passenger50 Vehicles40302010 0 78 80 85 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20Source: http://www.stats.gov.cn/tjsj/ndsj/2011/html/P1624e.htm
    57. 57. Conclusions:• China’s oil consumption cannot continue to grow at present rates; there is simply not enough oil out there• China is very vulnerable to oil shocks, and increasingly so as imports rise (esp. in industry & transport sectors)• China has no choice but to electrify its transport system as the country’s vehicle stock expands• In the global competition for resources, China is WAY ahead
    58. 58. US Oil Consumption & Production US Domestic Crude Oil Production by Source, 1990-2035• the US consumes 19 million (Millions of barrels per day) barrels of oil per day (2x China), 21% of global consumption• US is the world‟s #1 oil importer at about 10 million barrels of oil a day• the transport sector accounts for 71% of US oil consumption• Overall, the US is extremely vulnerable to supply shocks, Source: EIA Annual Energy Outlook 2011 despite projected increases in domestic production
    59. 59. US energy mix
    60. 60. The US: a suburban country
    61. 61. "He ought to be taking advantage "As a country that has 2% of the of all of our offshore, and [theworlds oil reserves but uses 20% of Arctic refuge], and North Dakotathe worlds oil, were not going to be and Oklahoma and Texas gas able to just drill our way out of the resources, instead of trying to problem of high gas prices.” hold them off.”
    62. 62. World gasoline prices ($US/gallon) 10 9 8 7 6 5 4 3 2 1 0 la ia i t pt ria a n i co ia si a S nd n a da dia zil re l ia ria ea an ny ce g n s ly y u e rab uwa gy ige Ir ex ss ne U ila hi o a t r UK on de a nd Ita rwa ez A K na In Bra ap str us Ko Jap rma ra n K we rl E N M Ru do Th a C a g in Au A th F g S he No en u di In C S u G e on t V a S So H NeSource: http://www.bloomberg.com/slideshow/2012-05-12/highest-cheapest-gas-prices-by-country.html#slide1
    63. 63. The age of cheap and abundant resources is over• Americans – and the world – haven‟t grasped this yet• Not just oil: – water – many metals & minerals – uranium – grain production (per capita) – wild fisheries• We are in a different era now, which calls for different approaches
    64. 64. We‟re in for a bumpy ride:The next 20 years will not be anything like the last 20 years
    65. 65. ConclusionsDue to geological and geopolitical reasons, a global energy crisis centering on liquid fuels is likely in the near future• we need to rapidly put in place a sustainable energy infrastructure to replace the existing oil infrastructure• we need to do so NOW, not simply because of climate change (the usual justification), but also because of the global energy supply picture• a smooth and seamless transition to an alternative energy regime is no longer possible because we have far waited too long• we must get actively involved in the conversation about alternative energy sources, or it will be imposed upon us
    66. 66. Thank you!contacts: sncook88@gmail.com
    67. 67. The Shale Gas Revolution• IEA is now referring to a „golden age of gas‟• „hydraulic fracturing‟ or just „fracking‟• Horizontal drilling combined with fracking has dramatically changed the natural gas landscape• EIA estimates US has 860 tn cubic feet of „technically recoverable‟ reserves• China: 1,275 tn cubic feet• Global shale gas reserves of 6,600 tn cubic feet; roughly equal to today‟s current reserves
    68. 68. Shale Gas: Boon or Bane?• Requires vast amounts of water: 2m-4m gallons per well + 15,000- 60,000 gallons of chemicals• Not suitable for arid regions• Sand mining• Risk of groundwater contamination by toxic chemicals and methane• Risk of earthquakes• Generated a popular backlash in US & Europe• France has banned it; NY State temporarily banned it, now lifted• At best, shale gas should be treated as a bridge fuel
    69. 69. Further readingOverviews• The Impending World Energy Mess, by Robert L. Hirsch et al• Peak Everything: Waking Up to the Century of Declines, by Richard Heinberg• Crude World: The Violent Twilight of Oil, by Peter Maass• The Long Emergency: Surviving the End of Oil, Climate Change and Other Converging Catastrophes of the 21st Century, by James Howard Kunstler• The Prize: The Epic Quest for Oil, Money & Power, by Daniel YerginPeak Oil• The Party‟s Over: Oil, War & Fate of Industrial Societies, by Richard Heinberg• Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, by Matthew R. Simmons• The Coming Oil Crisis, by Colin CampbellPeak oil and globalization• Why Your World is About to Get a Whole Lot Smaller, by Jeff Rubin
    70. 70. China‟s Share of World Commodity Consumption (2009-10) Commodity China’s % of World Cement 53.2% Iron Ore 47.7% Coal 46.9% Pork 46.4% Steel 45.4% Lead 44.6% Zinc 41.3% Aluminum 40.6% Copper 38.9% Eggs 37.2% Nickel 36.3% Rice 28.1% Soybeans 24.6% Wheat 16.6% Chickens 15.6% PPP GDP 13.6% Oil 10.3% Cattle 9.5% GDP 9.4%
    71. 71. German military think tank report on peak oil• Conclusions of the report by the Bundeswehr Transformation Center (leaked to the media in August 2010): – In the near term, rising oil prices will lead to lower consumption and economic output (e.g., recession or worse) – Increasing transportation costs will lead to lower trade volumes, lower incomes for many and unaffordable food for some – Pressure will increase on gov‟t budgets as they struggle to keep populations fed, deal with mass unemployment and try to invest in sustainable forms of energy – “In the medium term, the global economic system and every market oriented national economy would collapse.”
    72. 72. Causes & consequences of the oil shock of 2007-08 • “Whereas historical oil price shocks were primarily caused by physical disruptions of supply, the price run-up of 2007-08 was caused by strong demand confronting stagnating world production.” • “The experience of 2007-08 should thus be added to the list of recessions to which oil prices appear to have made a material contribution.”

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