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Aftermath

What will be the effects of peak oil on the ordinary citizen and how will we see it coming? On this page we see the likely effects of the future by examining the past.

Fuel

2000  Fuel Protests

Petrol queue The European fuel protests of 2000 were an excellent example of what will happen when we are deprived of our petrol and a salutary warning.

The price of oil had been low for some time and when OPEC decided to reduce their quotas, the costs of oil shot up. Fishermen in France began to protest about the rises and the bug spread across the Channel. Farmers (who use low-tax fuel so were more aware of the rises) and hauliers (who saw their Continental rivals using lower taxed diesel) started their own opposition. The government was in a pit as it had gradually raised fuel taxes when oil was cheaper and did not reduce them as the price per barrel rose. The result was blockades of refineries for about two and a half weeks.

The implications of just this minor shortage was tremendous. Naturally there were huge queues at petrol stations to refuel, but there was also panic buying at the shops. Some ran out of bread and milk. Postal collections were suspended on Sundays to conserve fuel. Farm animals were threatened with starvation because the feed was unable to be delivered. Schools closed down and hospitals cancelled all but emergency operations. And all this from two and a half weeks.

For the richer countries, initially, the oil will probably still be available although the consumer will pay through the pocket. Governments (in Europe at least), could soften the blow by reducing the tax on fuel but they would have to find the money from somewhere else, especially if recession is biting. For the poorer countries (and the others eventually), there will simply not be enough oil to cover demand. The results, coming in over a longer period, will probably not be as dramatic as the 2000 fuel protests, but we will have to find ways of reducing our fuel usage. The costs of air travel will rise and foreign holidays will decline, exotic foods will become rare and there will be less choice in supermarkets, commuting long distances to work will be less acceptable, driving children to school will be frowned upon. The consequences are enormous – and it will all happen within a decade or two.

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Power

East USA and CanadaThe image left is a satellite picture of the eastern USA and Canada. Move the mouse over the image to see what it looked like during the blackout of 2003.

The blackouts that hit the eastern USA and Canada in August 2003, and the lesser failure that hit London’s Underground system shortly afterwards shows how totally dependent we are on electric power and the dramatic effects that its absence causes. Standard and Underground trains came to a halt, trapping people within; lifts stopped between floors; street lamps failed; people poured from the buildings; all increasing the risk of accidents. People were unable to communicate because they had switched from land phones to mobiles. The pressure on the emergency services was immense. Imagine the effects when it was the whole country, not just a few cities that is hit. And if that blackout lasts for days, with more occurring in following weeks

When oil begins to decline, the blackouts (and brownouts when power is reduced) will be constant and hit throughout the year. No light, no heating, no cooking (unless you have gas and imagine how the cost of that will rise!) The number of deaths will soar and so will the pressure on the authorities. The emergency services, the hospitals and GPs, welfare – costs will rise as efficiency suffers.

In time, the number of blackouts will increase and their time lengthen. This is when the very substance of civilisation will be put at risk. Our modern society cannot exist without electricity. It is even more essential to us then oil. Blackouts will take us back to the dark ages – in more respects than one. And that is where the Olduvai Theory comes in (see Olduvai Theory).

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Lawlessness

HurricaneThe hurricane and flooding that struck New Orleans and the surrounding areas of the southern United States in August and September 2005 showed just how quickly the most organised society can break down. Although the affected area was huge, most of the USA was unaffected and therefore still had a fully working infrastructure, security and government. Yet the inhabitants of New Orleans were left to fend for themselves for a week, resulting in looting (both for gain and survival), widespread crime and death. Imagine the results if it was a whole country affected, and if the security and emergency forces were unable to help because of oil shortages. It is an excellent example of what can happen when both security and the basic necessities of life are removed.

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Economy

If you're wondering why you never hear of peak oil from the oil companies and government, remember what happened in January 2004. Here is the report from the BBC website:

Shell shares dive as reserves cut

Despite rising profits, investors have turned their back on Shell. Giant oil group Royal Dutch Shell has said it is trimming its figures for proven oil and gas reserves by 20%. Stunned investors promptly began a sell-off that knocked more than 7% off the Anglo-Dutch firm's share price in both London and Amsterdam. Shell said it does not expect the reassessment to have any impact on its financial results, as 90% of the reserves involved remain undeveloped. But analysts were unconvinced. Shares in fellow oil firm BP also fell 2%.

Investors and oil analysts were startled, and puzzled, by the move.

"It was shocking, to say the least," the Agence France Presse news agency quoted one oil analyst who did not wish to be named as saying. "They gave no detailed explanation why this has happened."

"This reduces the value of the company by 10% using discounted cash flows," said Richard Brackenhoff, an oil analyst for Kempen & Co.

Eventually, the chairman was forced to resign. The effects on the Company's share price is clearly shown in the chart below. Barely had the shares begun to rise than another reserve cut in March knocked them down again.

Shell Shares

Shell Share Price December 2003 to February 2004

You can imagine the effects on the stock market if the oil companies admitted that oil was going to decline every year from now on and never recover. One day they will have to admit it but no company (or chairman) wants to be the first.

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Omens

How will we know when the oil decline bites. People have made various predictions. The first is from the ASPO Newsletter of March 2002 (the ‘Nemesis Report’).

Initially it will be denied. There will be much lying and obfuscation. Then prices will rise and demand will fall. The rich will outbid the poor for available supplies. The system will initially appear to rebalance. The dash for gas will become more frenzied. People will realise nuclear power stations take up to ten years to build. People will also realise wind, waves, solar and other renewables are all pretty marginal and take a lot of energy to construct. There will be a dash for more fuel-efficient vehicles and equipment. The poor will not be able to afford the investment or the fuel.

Exploration and exploitation of oil and gas will become completely frenzied. More and more countries will decide to reserve oil and later gas supplies for their own people. Air quality will be ignored as coal production and consumption expand once more. Once the decline really gets under way, liquids production will fall relentlessly by 5%/year. Energy prices will rise remorselessly. Inflation will become endemic. Resource conflicts will break out.

Glenn Morton on his website is equally bleak

This spreading of rolling blackouts will ultimately cause severe recession, especially as oil prices go higher, which will happen later this decade. Oil powers aeroplanes, electricity, jobs. Bartlett is quoted as noting that modern agriculture is merely a way of converting petroleum into food! Without energy, food supplies decrease.

Another implication concerns the ability of governments with socialistic tendencies to maintain their socialism…this is the last generation of Brits and Scots who will have the social programs like National Health Care. Governments all over the world will not be able to finance plentiful services in the face of high oil prices.

Political instability will ensue. I am sure that a few leaders will be headless after the masses get to them. It is in such times that Lenin, Hitler and other dangerous individuals take the reigns of power. Life will be a bowl of cherries then.

After the world Hubbert peak, when energy costs go way through the roof, there will be a period in which an emphasis on conservation will occur. This will be like the early 1980s when the price of oil caused the world to become more energy efficient. Smaller cars were purchased, insulation put into houses and lighting changed to efficient bulbs. That will occur again putting off some of the worst problems. But this time, unlike the 80s, there will not be increasing oil production. Every year unrelentingly we will require further efficiencies in our energy use. Every year inflation will add to the price of goods because oil gets scarcer and scarcer…My grandfather told me about the Great Depression, indeed he raised his family during that time. His job was easy by comparison with what is about to hit.

People in Third World countries, like Mexico, will do the only human thing, the thing we all would do in their circumstances – try to get into countries they perceive have wealth and jobs. The army, without oil will be unable to defend the borders. The sight of poor desperate people being shot in order to keep them out will not be pretty.

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How will you know?

If you are reading this, you have one big advantage over 99% of the rest of the world – you are aware of the problem. Almost everyone else believes that oil is plentiful or at least a minor problem. They worry about global warming, or poverty, or wars. They will not know of peak oil or believe it until it hits them in the face, until the prices at the pump go up every day and unemployment begins to soar. But you do. Watch the newspapers and television, searching for the statistics that are usually given little emphasis – in particular, oil production. Download the ASPO newsletters every month, and the BP Statistical Review every year.

As for alerting the politicians, the experts have already tried that but our leaders either ignore them or don't believe them. Nevertheless it is worthwhile contacting them as well as newspapers, the broadcast media and schools. The awareness of peak oil will be a gradual thing and the more that the doubters have heard of it, the quicker they will recognise it.

Production (last 7 years)

A1. Last 5 Years' Oil Production

Oil Prices

A2. Oil Prices (1964-2007) **

According to the EIA figures, world oil production seems to have reached a plateau, despite the very high oil prices. In the past, OPEC increased or decreased production to keep the oil prices within a range (for a long time, between $20 and $28). One would have expected the high cost of oil to stimulate a rise in production to lower the market price, particularly now we have seen the soaring rises in 2008. The flattening of production and the continued high price suggests that OPEC has little control now over what it is outputting. It says it will not increase production; it knows that it cannot.

As far as oil prices go, we can see in chart A2 what we are aware of in our day-to-day lives, how they have already surpassed the catastrophic heights seen in the 1970 and 80s. Few people are yet attributing these rises to peak oil but the link is clear. When a hurricane hits the Mexican offshore oil fields or there is an attack on the Saudi government, the price of oil rises because there is no longer anywhere else to turn to for alternative supplies. If your local supermarket does not get a delivery of bread, you won't be worried if you can go to another supermarket or local shop. But if they are already producing at full capability just to supply their regulars, the results are shortages and price rises.

As far as oil production is concerned, as the years go by, the plateau will begin to drop and a permanent decline will become clear. Oil companies and governments will pass it off as a short term ‘blip’, assuring everyone that there is plenty of oil and production will begin to rise soon. This is your advantage for, while the unenlightened will be placated, you will read between the lines and act. Do not miss your chance.

For more detailed information on what you can do, see the What to Do page.


** Indicates chart updated for 2008
 

Contents

Fuel

Power

Lawlessness

Economy

Omens

How will you know?

 

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