Guest post: Simon Tegg on Peak Oil

Written By: - Date published: 1:57 pm, March 18th, 2008 - 16 comments
Categories: articles, economy, Environment - Tags: , ,

Meet Guest post. Guest post is 32 years old, he likes long walks on the beach and lively political debate. He is our new vehicle for experts on interesting and relevant topics to contribute posts to The Standard.

Our first guest is Simon Tegg, who has done research on peak oil. It says something about how under-prepared we are for peak oil that Simon’s papers have caused a considerable stir even among those who are well-informed on environmental issues. Anyone who is concerned about New Zealand’s long-term, even medium-term, prospects should read what Simon has written.

Guest post: Simon Tegg on Peak Oil

oil-barrels.jpgThe theory that oil production is about to enter an irreversible decline has gained currency as oil prices have rocketed upward. Contrary to popular perception, this does not mean oil is ‘running out’, but is rather a decline in the rate at which oil can be extracted.

A peak in production rate of a finite resource typically occurs when half the resource has been extracted. There is still a lot of oil out there (perhaps half of all the oil that will ever be extracted), but as this oil is much harder to get at (eg. deepwater, Canadian tarsands) the rate of production will fall, approximately mirroring its rise over the last century. Oil discoveries peaked in the 1960’s. We have discovered less oil in every decade since then and there is no basis to believe that financial incentives and improving technology can turn around a 40 year trend. While prices have risen, oil production has been essentially flat and yearly average production is still down on 2005. A number of large oil projects are due to come online in 2008 and 2009 and production may shift up somewhat, but beyond 2012 the projects thin out dramatically. It looks like we are now at Peak Oil.

An increasing number of commentators have voiced concern, including:

  • Energy investment banker and advisor to the 2000 Bush administration, Matthew Simmons.
  • International Energy Agency chief economist, Fatih Birol.

Their views range from a rapid decline in oil production in the short term to an emerging oil supply crisis.

It is possible to manufacture liquid fuels out of biomass and coal, but will a ramp up in production of these fuels prevent a total liquid fuel peak? Highly unlikely. For comparison, all the food grown in the world has an energy equivalency of about 10 20% of our liquid fuel consumption. Oil is the world’s most important resource, we’re not talking about toothpicks here. And when the ‘lifeblood of industrial society’ goes into decline there are some serious and detrimental spin-offs:

  • Oil exporting countries are keeping more of their own oil as their populations grow and their economies demand more energy.
  • Various groups are attacking the vulnerable infrastructure between oilfield and petrol pump for profit. These attacks may increase.
  • So-called substitute technologies may depend on minerals mined and transported and manufactured with oil.
  • The economic effects of peak oil will hamper our ability to mitigate the effects of oil’s decline. Who will be able to afford an expensive new piece of wonder technology when the economy is in decline?

Neither of the major parties want to talk about Peak Oil, because parties that talk about scary realities are less likely to be elected than parties that promote baseless optimism. Fortunately, ordinary New Zealanders are doing something about it, such as Transition Towns New Zealand. I have written two papers that explore this issue in greater depth with a New Zealand perspective, which I encourage you to read if you’re interested in finding out more about this topic.

16 comments on “Guest post: Simon Tegg on Peak Oil”

  1. Sam Dixon 1

    you realise it’s bad but then you read these papers and realise it’s much much worse.

    captcha: population fell…

  2. Steve Pierson 2

    Scared the shit out of me. I hadn’t considered what would happen to New Zealand’s access to oil and alternative techs as peak oil approaches – being small and distant, we’re one of the first in line to be cut off.

  3. Oh man – does this mean I have to sell my Monaro???

  4. Matthew Pilott 4

    I’m going to find a quiet island and grow turnips. People who wish to share are welcome to apply. Must have entertaining skills and combat training.

    In all seriousness though, if Hydrogen Fuel Cells can’t be developed in a hurry, then we’re in trouble. They are the only technology on the horizon that has the capacity or potential to take a real bite out of oil consumption.

    Problems are manifest – the cost of the units, and difficulty of setting up infrastructure. Where they can really work, though, is through decentralised power generation. Each community, suburb or town can have their own, augmented with renewables, and the power could power town cars and so on. It’s all very utopian at this stage though, I’m first to admit.

    Suggest interested parties read The End Of Oil by Paul Roberts (I’ll have a copy on the island) – it’s depressing, but gives some hope. As Mr Tegg mentions, the question is when to act, and with what degree of effort. We’ve got to get to a lower level of oil consumption per capita – the question is whether we ease down to it with increased cost now, or crash down from a great height.

    Roberts makes many other salient points – e.g. the energy sector has made a multi-trillion dollar investment in the hydrocarbon infrastructure extant today – and will fight to protect it.

    Anyway, without fuel cells, we’re probably hoping for a silver bullet – fusion is closer, what with the Large Hadron Collider and CERN getting amongst it – but it’s still a long way away yet…

    P.S. robinsod, no, be a capitalist – if you can pay for it, it’s yours (and externalities, well, they’re…external 🙂 )

  5. Pascal's bookie 5

    “Oh man – does this mean I have to sell my Monaro???”

    Certainly not. We just need to invade Iran (purely to liberate them from the mullahs and save ourselves from dhimmitude). pronto.

  6. But I really, really like that car…

  7. r0b 7

    Hey ‘Sod – I had an HK Holden for years, back in my hellraising youth. What a brute of a thing!

    Now days I ride a bike. Because I’ve long been convinced that the future portrayed my Tegg and others is on its way…

  8. Draco TB 8

    I think it would be fairly obvious that NZ would be one of the first nations in the world to lose access to imported oil. We’re a fair distance away and there’s a lot of ocean in between where an oil ship can go missing. We, quite simply, have no way to protect that oil shipment especially if we don’t have access to any oil.

    The best we can do is to find our own reserves and start planning for their frugal use minus any foreign ownership/control and we definately shouldn’t be thinking of exporting them.

  9. K1 9

    I’ve been aware of peak oil for some time, and although my position apropos the consequences has moderated somewhat over time (as these things typically do), I still see it as being of obvious critical importance. However I’m still not seeing anyone but the Greens and maybe the Maori Party even recognising the problem, let alone working to fix it, as is absolutely required. If findings like those in the Hirsch Report are paralleled in NZ (and I can’t see why not), then we’re fairly uncontroversially in the shit. The next 10-20 years will almost certainly bring us some big problems, and the concerted effort towards solutions need to start now. Labour and National both ignore this as they’re locked in a battle to win at all costs (I blame this particular mental disability on our national obsession with rugby – it’s kinda a “go the blue/red team” thing), when they should really be focusing on doing the right thing for the country (sorry, Tui moment there…) And they’ve both been warned about this for years.

    Damn frustrating, really. But what can practically be done?

  10. r0b 10

    Damn frustrating, really. But what can practically be done?

    Vote Green?

  11. Santi 11

    “I’m going to find a quiet island and grow turnips.”

    May I suggest an atoll in the middle of the Pacific Ocean? 🙂

  12. Matthew Pilott 12

    May I suggest an atoll in the middle of the Pacific Ocean?


    But that means you either believe in climate change and sea levels rising and want me to drown, or you don’t, and have very kindly suggested a place where I can relax in the tropics – which is it? 😉

    Draco TB – I’m all for keeping our oil – look at Norway and how they did it! However, all that will do is give us an extended plateau during which to act – as K1 points out, there ain’t much acting!

    K1, as an optimist, I see the pace picking up alomst exponentially – a short few years ago the concept of peak oil (and climate change, they sort of go hand in hand) were met with ridicule and derision as a rule. The inverse is true now – and so the appetite for change is growing apiece.

  13. Pablo 13

    Can I recommend the following:

    “In this document, the Swedish Commission on Oil Independence propose a number of far-reaching, concrete measures that can end our dependence on oil by the year 2020 and tangibly reduce our use of oil products.”

  14. higherstandard 14

    Pablo have you read the document fully although they do make the comment as you state they are talking of reducing their dependance on oil not ending it.

    • Through more efficient use of fuel and new fuels, consumption of oil in road transport
    shall be reduced by 40-50 per cent.

    • In principle no oil shall be used for heating residential and commercial buildings

    • Industry shall reduce its consumption of oil by 25-40 per cent

  15. insider 15

    The ongoing issues with the Peakies is that they continue to underestimate the resource, underestimate engineering capability, underestimate thechnology improvements and also ignore substitution. They also tend to ignore their false prophesies of the past and the number of significant revisions they have had to undertake of the resource base and the peak date.

  16. Steve Pierson 16

    insider. All those issues are addressed in simon’s papers. did you read them or are you speaking from a position of ignorance?

    of course there will be improvements in tech and there are substitutes but neither can address the problem on the scale we’re talking about.

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