Archive for November, 2007

Deputy Scott Ogier’s speech on Peak Oil and exponential growth to the States of Deliberation

November 27th, 2007 by Scott Ogier

I want to spend a little time on something called Peak Oil It is something I have mentioned here before in this chamber. There was a packed presentation at Candie lecture theatre the other night on the topic at which there were three Deputies, it was a shame there wasn’t more. Some people went through the Peak Oil scenario for the first time there and I felt for them, it is a sobering development.

Peak oil is the point where we are no longer increasing the rate at which we are pumping oil out of the ground, i.e. oil production increases as it always done to meet the ever increasing demand, it reaches the peak of production, i.e. peak oil and then begins the descent at the other side of the curve.

They say we will only know the peak after is has passed although it is predicted to occur somewhere in the next 10 years if it has not already happened.

After increasing in a linear fashion since the 1930s, oil production reached its peak in 2005…. at least, since middle 2005 we have not had a larger month, that was the peak so far. It is possible we may have another larger month at some stage. As time passes that looks remote and for all intents and purposes we are at the top of the curve, the peak of oil production and are about to head down if not already descending. Oil discoveries in recent years are slight compared to what we are using. Since 1981 we have used more than we find and at present we use 3 times more than we find.

As you descend the other side of the peak oil slope however, it doesn’t take as long to descend as it does to ascend because obviously demand is so much higher now than it was while we ascended the slope. It won’t take another century to use the next half…. In fact much less. We are currently at highest demand and increasing by 7% every year and at 7% increase per year your requirement doubles every 10 years.

In fact, if I can use an example of how doubling growth affects a finite resource, and I make no apologies for using Professor Al Bartlett‘s example of exponential growth within a fixed environment.

Let’s see what happens when we have this kind of steady growth within a finite environment. Bacteria grow by doubling, one bacterium becomes 2 bacteria, the 2 become four, 8, 16, 32 and so on. Suppose we had bacteria which doubled in this way every minute and we put one of them into a bottle at 11 o’clock in the morning. The bacterium has a doubling time of one minute and at 12 o’clock noon we observe that the bottle is full. Now there is our case of ordinary steady growth. It has a doubling time of one minute and it is in the finite environment, one bottle. At our level of steady growth, 7%, we have a doubling time of ten years.

I want to ask three questions..

At what time was the jar half full?

Well would you believe, 11.59, one minute before noon.

The second question is, if you were an average bacterium in that bottle, at what time would you first realise you were running out of space?

Think about this, because this kind of steady doubling growth is the basis of national economies and the global economy, our local economy, investment expectations and our oil use.

Let’s contemplate the last few minutes in the bottle, at 11.59 it is half full, at 11.58 it is quarter full, then an eighth, then a sixteenth, at 5 minutes to twelve, when the bottle is only 3% full, 97% space just yearning to be used, how many of us would realise there was a problem?

Someone said to me, well Peak Oil is not a problem as we have as much oil in the ground as we have used, so let me ask you, what time is that in our model of steady growth?

11.59, one minute before 12.

They say that technology will be able to pump more out of the existing wells and that harder to extract oil will be used. Well let’s see.

Suppose at 11.58 some of the bacteria realise they are running out of space and they begin a search for more bottles and they find three more bottles.  Now that is a colossal discovery. Three times more than they have ever contemplated, they now have four bottles. Before the discovery there was only one. Now surely that will be sufficient for their needs. This will give them a sustainable society. So the next question is, how long can the growth continue after the magnificent discovery of this new resource, a quadrupling of the proven resource.

Well at 11.59 the bottle is half full, at 12.00 it is full, 12.01 they fill another bottle and at 12.02 all four are filled and that’s the end of the line.

Now you don’t need any more arithmetic than this to evaluate the statements that we have all seen and read, from experts who tell us we can go on increasing our rate of consumption and that new discoveries or increased extraction from existing sources will save the day. I remind you, at what time are we at when the bottle is half full?

One minute to twelve.

So, oil production is declining and our demand for oil is doubling every ten years.

What happens when demand increases and supply decreases…. Price goes up… a lot.

What happens when a resource upon which nations depend starts to run out….

The stronger nations start to gobble up weaker nations to secure supply.

For example, Iraq could invade Kuwait, USA might invade Iraq, the oil wars could commence. Countries could switch off gas supplies to one another, oil could hit $100 a barrel… that sort of thing, talking hypothetically here of course.

Just a few weeks ago, we were seeing stories about $90 oil…. a couple of months before that, it was $80. So far this year, oil prices have almost doubled. Pick your marker. They all bear the same message: The oil market is changing.

Oil economists and geologists debate whether world oil supplies have peaked. Most agree in the next 10 years.

In the markets, though, the debate is over.

Sir David King the Scientific Advisor to the UK Government is rather more bullish, he tells us that just so long as we ‘discover more oil’, oil should not peak for another 22 years. He gives the official UK government view. The message is quite clear however, there is no disagreement on what is happening, only on timing, as always.

So members, that is the fast explanation of Peak Oil.