Six converging threats to our way of life... and how to be ready for the ripples!

 

Wise Up - The Crash Course

Chapter 1B - The Impacts of Peak Oil

(8 minutes)

All videos should be viewed in high definition unless your download speed is slow. Click on "SD"  above & then select "HQ". Pause for a minute if it needs to buffer.
© 2009 Mitchell Lawrie

If you find this course of value, please email this website to friends and family.

 

Go Next To:  Chapter 1:C:   Peak Oil and Australia  (6 minutes)

Previous Chapter

For Further Information:

www.energybulletin.net  (wide range of articles on peak oil impacts)

www.lifeaftertheoilcrash.net  (most famous peak oil “doomer” site)

www.peakoilblues.com  (dealing with the psychological impacts - when you learn about peak oil you may find it disturbing or disorienting. Give yourself some time to digest it and reach a balanced perspective which is right for you. This site may help.)

 

Prefer to Read? Here it is...

 

Chapter 1B - The Impacts of Peak Oil

Here in chapter 1. B we’ll now look at peak oil’s impacts on the economy and society. 

WHAT MIGHT HAPPEN AT PEAKING?

Ok... We now know that peaking could very likely occur in the next 3 to 5 years... if it hasn’t already started. What can we expect to happen when world oil production goes into permanent decline after the peak. For the global economy to keep growing, as governments and companies around the world so desperately desire, requires a growing oil supply to match the world’s growing oil demand. When the decline in production becomes obvious then prices will rise as the nations of the world engage in a bidding war for the available oil. If we are lucky it will remain a bidding war and not a real war. When the supply fails to keep up with the demand then prices increase until demand is reduced. Economists call this “demand destruction.” These prices increases can be much higher than anything we’ve ever seen before. There is no real quick fix for this. If any government tries to artificially control prices then physical shortages will develop. This could mean petrol stations with no petrol, manufacturers without needed materials, farmers struggling to find and afford fuel, and people out of work. The beginning of what some authors have called the “long emergency” or “long descent.”

JUST ANOTHER “ENERGY CRISIS”?

Is this just another energy crisis like the 70s? No... this is not a temporary problem. The overall downtrend in oil availability will be permanently down. Oil is the lifeblood of today’s world economy. In particular there will be a severe liquid fuels problem for the transportation sector. And there will be no quick fixes for this problem. A well-know study commissioned by the US Dept of Energy, commonly referred to as the Hirsch report, found that an unprecedented massive preparation program would need to be started 20 years before peak oil to avoid major impacts on the country. The US government quickly buried the report and now they and we here in Australia have far less than 20 years and no sign yet of serious preparations. In fact, many economic analysts and government policy-makers do not even comprehend the extent of the threat. The inertia of our society’s faith in growth and technology is really quite amazing!

GROWING OIL SHORTAGES WILL INDUCE GROWING WORLD “DEMAND DESTRUCTION”

As supply falls further behind demand than rising prices will cause increasing demand destruction in the economies of all oil importing countries around the world. Demand destruction begins with mere annoyance at the cost of filling up your car but tipping points are reached where the economy is destabilized into recession and eventually depression. A number of analysts who have been carefully watching the impact of oil prices believe that one of the main triggers for the global financial crisis and recession in 2008 was oil reaching 147 dollars US a barrel in July that year. Peak oil experts have been predicting for at least the last 5 years that peak oil would cause great volatility in prices as rising oil prices crash economies around the world thereby reducing oil demand which then causes oil prices to fall sharply. The crash of 2008 happened sooner then most peak oil experts expected however because they underestimated how fragile the global financial system was. They now predict that when the global economy starts to recover pushing up oil demand again, even higher oil prices could again crash the global economy. This up and down global see-saw could occur several times with the recovery getting more feeble each time as the oil deficit worsens. This scenario is highly likely if peak oil is close at hand.

OIL PRICE & RECESSIONS

To demonstrate the sensitivity of the global economy to oil price increases this graph overlays oil price, the dotted blue line, on major recessions, the gray bars. Note how every significant rise in the oil price coincided with a recession. Over 30 years there are 4 oil price spikes and 4 recessions... 5 if you count the most recent episode in 2008. Oil drives the engine of the global economy. It is the most crucial resource.

NOT TO WORRY, WORLD WILL MUDDLE THROUGH?

Not true. According to Dr Bezdek and other peak oil analysts we should be worried.

The problem of the peaking of world conventional oil production is unlike any yet faced by modern industrial society.

Previous energy transitions, from wood to coal and from coal to oil, were gradual and evolutionary.

But this time the ... World may be facing an imminent energy discontinuity that will be abrupt and painful.

And the ... World has yet to grasp this or its implications.

OIL PEAKING MEANS “END OF CIVILIZATION AS WE KNOW IT”

Does this mean the end of civilization as we know it?! No. Not according to this last slide of Dr Bezdek’s that I’ll be using.

In recent years there has been a growing number of doomsday books and websites which are often too extreme. Based on peak oil they have put forward a number of apocalyptic scenarios such as the abandoning of car-dependent suburbs, a major die-off of world population, total economic and financial collapse, war, famine, disintegration of civil order into a Mad Max world. I don’t believe we should panic. We are not all going to wake up tomorrow to all these things on our doorstep. However, that is not to say that some people, in some countries are not going to wake up to some of these things in the coming years. Fortunately there are some viable risk management and mitigation options we can implement on both a personal level and, hopefully, on a national government level.

The problem is that many of the national level actions should be initiated more than a decade in advance of peak oil. Already in 2007 Dr Bezdek was saying we must start now… or yesterday. Today very little has still been done and with national budgets in Australia and around the world constrained due to the crash of 2008 it is highly unlikely that major government preparations will spare us from some adverse effects. I believe we must personally prepare for the future.